ATM - A2 Milk Corporation Limited

[sb9]

Does anyone here know the exact date of FY results announcement, I know its August, but don't know exact date.

[Hawkeye]

So when can we expect an actual offer from someone? What is the in your own opinions "expiry" on the interest, meaning no offer is likely to come.

[Jasemc]

So when can we expect an actual offer from someone? What is the in your own opinions "expiry" on the interest, meaning no offer is likely to come.

Me thinking if they doing due diligence then offer will come before results if the numbers are good. If numbers bad may wait and let sp drop. Just a thought?

[NT001]

Hawkeye, it seems there is probably no deadline and it is not certain that an actual offer will materialise, although it seems likely - just not yet. If an "offeror" gives notice of an impending takeover bid, it is required to make its offer in writing to shareholders of the target company during the period 14 to 30 days after giving notice. If it doesn't do so in that window of time, there is no offer and the process lapses.

In this instance, Freedom Foods and Dean Foods indicated to the a2 Milk Company on or about 21-22 June an "expression of interest" in making a takeover bid for all shares in a2MC. But it appears this probably did not amount to giving formal notice of intention to launch takeover. The a2MC CEO, Geoff Babbidge said at the time that he did not expect a takeover offer in the short term future.

As we all know, additional parties have since indicated their wish to be involved in the takeover consortium, and this could be complicating the issue. Who would be included? What would be their respective stakes in the takeover vehicle? Where would the real decision-making power lie? Would they go for a full takeover (it might be hard to get 90% acceptance) or just a majority of the a2MC shares, probably much easier? What would they offer? What would be the purpose(s) of the takeover? Would the new owners simply acquire control of a2MC's IP and prevent anyone else using it, or would they continue implementing a2MC's global strategy? Would they run a2MC as a separate company or incorporate it into their takeover vehicle?

It seems that the vehicle would be Australian Fresh Milk Holdings (AFMH), which has been jointly set up by Freedom Foods, the Perich family (Leppington Pastoral) and Chinese food giant New Hope).

Freedom yesterday advised the ASX that AFMH has completed the purchase of Australia's largest single-location dairy farm, Moxey Farms, which happens to be a substantial supplier of A2 milk to a2MC. This is seen as an important preparatory step towards a potential takeover of a2MC.

The acquisition notice said: "Australian Fresh Milk Holdings Pty Ltd, a producer and seller of fresh milk for milk processors, has acquired Moxey Farms Dairy Pty Ltd., an owner and operator of dairy farms, for consideration of AUD80 million (USD59.47 million). Both companies involved in the transaction are based in Australia. Australian Fresh Milk is the joint venture company between Freedom Foods Group, Leppington Pastoral Company and New Hope Dairy. Under the terms of the Acquisition, the Moxey family would continue to operate Moxey Farms in a joint venture with the Perich family under a new Farm Management Agreement with AFMH. Upon completion, Freedom Foods will hold a 10% equity position in AFMH, with the balance held by Leppington Pastoral, Moxey Family and New Hope Dairy."

That would suggest that New Hope will be the big power in AFMH. And we know another big Chinese corporate, the online marketer JD, is also interested in a "strategic" stake in a2MC, but probably a smallish one. But where does all this leave Dean Foods, the biggest dairy operator in the US and one of the original parties to the "expression of interest" in a2MC? Would it be happy being a junior partner in a Chinese-run global dairy venture? Interesting.

[silverblizzard888]

The takeover code of conduct does not have a presence here because it was not a formal takeover, just an expression of interest. A formal takeover is one with specific terms i.e price offered for each share, so there is no 14 day takeover or 30 day limit, this is not a formal takeover, its just a chance to look at the books and for A2 to tell future shareholders they should think clearly before owning any shares given a takeover might happen. The reason there is a 14 day no takeover is so that existing shareholders can seek advice and sell their shares if they don't want to be part of it and 30 day limit so that it doesn't affect the company and its shareholders for too long. There also has to be a takeover notice under the NZX rules.

[QFD Sage]

My assumption is that the consortia are still working with the board. If they were miles apart in terms of expectations then the ATM board would have finished the discussions and got on with the capital raise which was previously acknowledged as being imminent. Given that the consortia is doing DD, they do not need to wait for the full year results are announced, so my expectation is that a bid will be forthcoming, and before mid-August. As to quantum, my best guess would be an offer of $1, but I am hoping for something higher...at this stage I would not be a seller at $1. What about you others?

[Nasi Goreng]

I would sell at $1 and I would consider re-investing some of that back into company who buys A2.

[sb9]

Does anyone here know the exact date of FY results announcement, I know its August, but don't know exact date.

Ok, will answer my question. It was 28 Aug last year, so I guess it'll be about that time in my opinion. Hopefully by that time we'll have a fair idea as to what's happening with recent proposal.

[Harrie]

Anyone noticed that the 5pm boys are back in town and buying rather than selling. looks like a good sign that the patient are buying off the impatient plus the traders squaring off their books at the end of the day to me.
The expression of interest seems to be dragging on a bit, not sure if that is a good sign or not. More likely that the major shareholders want a higher price than the FF/Deans consortium may have anticipated, so trying to lower their expectations. If an offer comes I'm suspecting $1.05 FWIW.

[NT001]

My assumption is that the consortia are still working with the board. If they were miles apart in terms of expectations then the ATM board would have finished the discussions and got on with the capital raise which was previously acknowledged as being imminent. Given that the consortia is doing DD, they do not need to wait for the full year results are announced, so my expectation is that a bid will be forthcoming, and before mid-August. As to quantum, my best guess would be an offer of $1, but I am hoping for something higher...at this stage I would not be a seller at $1. What about you others?

I don't think due diligence would be holding up the offer, but as mentioned in post 4314, I think the consortium has some other complicated issues to sort out, including who is actually going to be in the takeover group and what the group intends to do with a2MC.

As for what I would accept, it isn't just a matter of how much, although I appreciate that many shareholders will make a decision based purely on that. I've had A2 shares since its early years and would take other issues into consideration as well. My preference would be that a2MC not be just another smart NZ company that gets swallowed up by foreign interests. So, my decision will depend on a number of factors including the structure of the bid, who is behind it and what the consortium announces by way of a strategic plan for the future. And will a2MC continue to exist as an entity, with minority shareholders?

Getting 90% acceptance might force the group to go higher than it wants to. There's a range of possibilities. It could offer a mix of cash and shares in AFMH. If the offer is low, there could conceivably be counter-offers. Where does Dean Foods fit into the picture - that's still a mystery at present.

I'm glad there are plenty of contributors to this thread who say they would hold out for well over $1, but I doubt if such preliminary positions can give very useful guidance at this early stage. Better to wait until we know what the terms of offer are, IMO.