ATM - A2 Milk Corporation Limited

[Maxtrade]

Up 14%! Why the sudden extreme jump higher?

[winner69]

Up 14%! Why the sudden extreme jump higher?

Takeover at 11 bucks next week maybe

You need to read this thread …or the papers ….never mind ….get in now …heaps more to be made

[aperitif]

Post from March…..These talks would have been going on for a while now, GS will be assisting ATM(They hold ~5%)

A2M Takeover Target/Strategic Acquisition?

These are my notes and intended for my research purposes only

a2 is currently out of favour and has been punished by the market for a few reasons; management selling, lack of transparency re daigou/inventory/pricing, EBITDA margins, fourth downgrade, new CEO, stronger NZD, JH debacle, China tensions etc

Large multinational brands are struggling to sell infant formula into China and a2 will now be on their radar. Nestle, RB and Danone all mentioned in their earnings calls they are actively on the hunt for M&A opportunities as they are struggling to differentiate…

Rationale

· Li Xiao(China CEO) previously worked for Multinationals
· New Chinese board member (Bessie Lee)
· Board/Management haven’t bought(privy)/sold, PN has 800,000 shares expiring on 12 May 2021…
· New CEO David Bortolussi has a strong background in the consumer goods industry. He transformed Pacific Brands to be acquired by Hanesbrands where he took up the role as MD…
· CFO Race Strauss – 20 years at Unilever Australasia responsible for M&A etc
· No share buyback(privy)
· MVM acquisition – Supplier and geographic diversification, CAHG retain 25% interest and acquirer will get access to a world class facility in NZ
· Deep and long lasting relationship with China State Farm
· Key China Registrations (Dunsandel/MVM down the track)
· China Label is selling at ~40% pcp!
· Diversified into UHT Smart Nutrition and Full Cream 200ml offerings
· Institutions still holding a fair chunk of the register
· Stock price is trading at a two year lows

Nestle - Good strategic fit?

· Their a2 offering has had poor uptake in China, a potential scenario could be Nestle cease all a2 sales and take a strategic stake in a2(~15%) utilizing their large distribution network to push sales. Similar to when Coke purchased a stake in MNST.
· Starbucks/Nestle relationship. Oatly just signed nationwide distribution(USA) a2 something similar???
· Manufacturing capability and product innovation in the US

Interested to hear others thoughts. I have a few more notes regarding comparable valuations/premiums for those interested!

[aperitif]

Attachment 12846

Takeover would seem unlikely, strategic stake(10-20%) seems a far smarter capital approach. It should put a nice floor in the SP. Can’t see the NZ OIO allowing a full takeover, potentially in time.

GS helped them with the Fonterra strategic acquisition(rolling three year term) in 2018….three years later…..

We all know what happened to Vocus

[winner69]

Post from March…..These talks would have been going on for a while now, GS will be assisting ATM(They hold ~5%)

GS Corporate Advisory and A2 been in love for years …..met Babidge in lift heading up GS office years ago ……been lucrative for GS I reckon

GS broking / funds side don’t talk to Corporate side ….no inside info …..that’s what they say

[aperitif]

This will also explain who Synlait’s new Multinational customer is from 2023, beneficial for all parties. Strategic masterclass, with the MVM acquisition. The Coca Cola (16.7%) acquisition of Monster Beverage added rocket fuel to their business & share price. Shorters will have no desire to hold now with impending corporate activity/ and the future when Nestle locks up ~15%.

AFA0356B-B768-47F4-B853-8C2729956AFF.jpg

https://investors.monsterbevcorp.com/static-files/3361a24e-dbed-4a8e-a054-1420712a8922

[Maxtrade]

Sounds like it was just one newspaper with an substantiated comment. Nothing more than a speculative possibility. But the market reaction was pretty strong as though there must be something definitive behind it? Interesting how influential the media can be even with one article. Unless I am incorrect and have missed something more substantiated than the comment in the Australian?

[alokdhir]

Normally price action of this kind ...ie with huge volumes ...is based on some firm inside news ...after seeing the overall trading ...I will bet on something concrete coming out of this in next few weeks

Its worth a buy now ...max downside is $ 6 ...upside potential of $ 11 in next 3 months ....IMHO

Risk / Reward favouring the brave ....suddenly its golden cross will also appear to lend further legs ...

[Blue Horseshoe]

I would say they are waiting for the results to come out, share price will plummet and then they will make their move, sub $5.00

[JohnnyTheHorse]

I think this is largely shorts being squeezed out based on the price action in the first hour. I am surprised it had the momentum and closed near the highs, which may mean longer term shorts are continuously covering. If big money is serious about this they will gap it up on open tomorrow and really crush them. Let's see what happens.