ATM - A2 Milk Corporation Limited

**Baa_Baa** · 19-11-2022, 10:14 AM

A2 Milk needs its own dairy factories, Heard says
https://www.stuff.co.nz/business/far...ies-heard-says

**winner69** · 19-11-2022, 10:22 AM

Originally Posted by Baa_Baa

A2 Milk needs its own dairy factories, Heard says
https://www.stuff.co.nz/business/far...ies-heard-says

Nice article - pity headline didn't get Hearn's name right

All that shiny stainless steel costing hundreds of millions ..... do they have ambitions to be another Fonterra?

**winner69** · 19-11-2022, 11:32 AM

No doubt A2 spending $288m on their Synlait stake makes good 'strategic sense'

But that $289m is only worth $127m now - under water by $162m (down 56%) ..... but no worries its only money.

Better returns on their investments in the future I hope

**Mr Slothbear** · 19-11-2022, 04:05 PM

Originally Posted by winner69

No doubt A2 spending $288m on their Synlait stake makes good 'strategic sense'

But that $289m is only worth $127m now - under water by $162m (down 56%) ..... but no worries its only money.

Better returns on their investments in the future I hope

okay winner but what if, in an alternate realty A2 did not buy that stake and it was instead purchased by Feihi or danone? And they used that stake to make moves against A2 or A2 lost access to that processing capacity?

**Baa_Baa** · 19-11-2022, 04:20 PM

Originally Posted by Mr Slothbear

okay winner but what if, in an alternate realty A2 did not buy that stake and it was instead purchased by Feihi or danone? And they used that stake to make moves against A2 or A2 lost access to that processing capacity?

The Chair made it very clear, repeatedly, that the Synlait and MVM acquisitions were 'strategic', cosying up to the China players, and repeated a number of times how important those relationships are to A2.

I doubt whether A2 give much thought to what the market thinks about Synlait capital value, unless it provides an opportunity to increase the % ownership share alongside Bright Dairy.

The emphasis on the new Director over improving and building supply chains, manufacturing and distribution was referred to as well, a number of times.

Retaining about $660m cash, after the buyback, "for strategic investment", suggests they already have an eye to where the next manufacturing expansion might be.

I'd guess we'll see at least one manufacturing play in China before too long. I doubt whether any A2 ownership in any manufacturing facility will be outright owned where partnership synergies provide strategic advantages.