ATM - A2 Milk Corporation Limited

[NT001]

So if a bid eventuates for full takeover, what price would people accept? I'd take $1 but would expect the opening bid to be at 85 cents. Hoping that the major shareholders then lever up the bid price to $1 +.

My guess is that $1 would be too low for a full takeover. Which raises the question, who is going to stump up NZ$700m for a company that is still controversial and hasn't yet really proved it can make money outside of its "home" territory, Australia. I'm not knocking it, but that's the way it would be widely seen. And if the Chinese are involved in a motley takeover consortium, I think present shareholders would hold out for much more than that. Who needs it that badly? And who is going to call the shots?

A partial takeover for a controlling interest by a small tight-knit consortium makes more sense to me, but even then the buyers would need to have a good well-thought-out plan for what they're going to do with it. It's a highly specialised niche company which at the moment still has more enemies than friends in the global dairy industry and still has a long way to go to win international consumer confidence.

Anyway, we're still quite a way from the end of this story.

[Soldog]

So if a bid eventuates for full takeover, what price would people accept? I'd take $1 but would expect the opening bid to be at 85 cents. Hoping that the major shareholders then lever up the bid price to $1 +.

I for one hope the takeover doesn't happen, and I'd like to see the company go all the way. I think the team at A2milk have done an outstanding job to date! I hopefully look forward to holding for another 5+ years. Myself, I like the product and believe in the benefits of it. I think the company has a bright future if only we can navigate through all this. But if a takeover was to happen, I myself would be looking for around the $1.50+ mark. Aim high, why give the goose that lays the golden egg away! It has value! They want it for a reason!

[see weed]

I for one hope the takeover doesn't happen, and I'd like to see the company go all the way. I think the team at A2milk have done an outstanding job to date! I hopefully look forward to holding for another 5+ years. Myself, I like the product and believe in the benefits of it. I think the company has a bright future if only we can navigate through all this. But if a takeover was to happen, I myself would be looking for around the $1.50+ mark. Aim high, why give the goose that lays the golden egg away! It has value! They want it for a reason!

I agree fully with your post.... Unrelated....China's $30,500 billion ($30.5 trillion) of savings to start flowing overseas.... If I told you a2 would be trading at $2 in 2 years time, and paying 10c dividend, what price would it be worth then? Can another company start up and sell a2 milk in opposition to the a2 milk company? If another company can sell a2 milk, then I would also accept $1.50. You can sell an engineering company and start up another, but can you sell a2 and start up another? Once USA and China start drinking a2 milk, you wait, we'll all be kicking ourselves for selling out at $1.50c and their sales start to reach $1billion to $2billion. Have a nice day.

[NT001]

Can another company start up and sell a2 milk in opposition to the a2 milk company? .... You can sell an engineering company and start up another, but can you sell a2 and start up another?

I have always admired your faith and optimism, See Weed, which I pretty much share myself. I do believe that if properly managed, a2MC couldl be worth at least $2 a share within 3-5 years if not sooner.

As to your questions, yes it would be possible to start up another firm on the A2 theme. Only problem is that the "a2" label has been well and truly trademarked and protected and you couldn't use that. A2-only milk is a scientific description of a naturally occurring product, not a manufactured invention of a2MC, so the company can trademark the name but not patent A2 milk as such. You could sell your product as something like "Seeweed's A1-free milk", but not as "Seeweed's A2 milk". And the science behind A2 is public property - you just have to read the peer-reviewed research papers, which a2MC itself publishes in a cautious way on the Net.


You might have some problems setting up A2 herds without access to a2MC's patented testing technology (using a single hair from a cow's tail). I don't know when a2MC's patent over that technology expires in various global markets. It's a complicated legal area. In America there are individual farms that advertise their milk as A2 because they've had their cows tested by the University of California (Davis) which has a licence from a2MC. Some of these farms developed A2 herds at the time when the then A2 Corporation was making its first commercial foray into the US about eight years ago, and are now eagerly lining up to participate in the new US operation. They're obviously not seen as a threat by a2MC.

Quite a lot of lifestyle farmers with just one cow (usually Guernsey or Jersey) have also had their cows tested, mainly for health-conscious reasons. But if you were to set up a rival firm, it would be interesting to see whether a2MC tried to stop you using the tail test or simply accepted the cash it gets from letting farmers use it.

You can also test the milk from each cow and establish its A2 status that way, but I believe that's more difficult and costly than the simple tail-test. I think Fonterra probably still owns some patent rights to the milk-testing method, from the days when it was fully endorsing the A2 health proposition (which it has since tried to deny).

Of course, a2MC itself has to continually test its milk for A2 purity anyway, for quality control purposes and to ensure compliance with consumer protecion legislation.

It's a slightly murky area, but yes, a new A2 company could start up, or a company like Deans could just develop A1-free milk as a health product. My own guess is that this will inevitably happen regardless of whether or not a2MC is taken ove. As the A2 health message becomes more widely understood and accepted, and credible human clinical tests confirm the links between A1 and autism and schizophrenia and SIDS for example, it will be a tempting area for commercial exploitation, especially in the health-conscious US. But care will be needed, as US law prohibits denigration of a rival product (standard milk containing A1).

[drcjp]

Looking at the Deans report from FY2014 http://www.deanfoods.com/pdfs/annualreport.pdf and their Q1 15 data, I'm not convinced they have the legs for this. They would seem to have a minor role at best.

[see weed]

Looking at the Deans report from FY2014 http://www.deanfoods.com/pdfs/annualreport.pdf and their Q1 15 data, I'm not convinced they have the legs for this. They would seem to have a minor role at best.

I have just read about 5 pages and got tired of reading, but notice at the bottom of page 5 the annual sales of fluid milk that goes into 90% of US homes is valued at about $20 billion (US). Deans have 68 manufacturing facilities in 32 states, with distribution capabilities across 50 states. As of 31 December 2014 their local regional proprietary and licensed brands numbered 57. a2 would make it 58. I could not read any more cos my eyes were going crossed and blurry. But I do think Deans might be a bit scared of a2 coming on the scene, and this could be the reason they want to buy it out -- to hide it in the bottom drawer - cos they have a lot to lose, if all their customers started understanding the a2 story. Correct me if I'm wrong. SW.

[ziggy415]

I have just read about 5 pages and got tired of reading, but notice at the bottom of page 5 the annual sales of fluid milk that goes into 90% of US homes is valued at about $20 billion (US). Deans have 68 manufacturing facilities in 32 states, with distribution capabilities across 50 states. As of 31 December 2014 their local regional proprietary and licensed brands numbered 57. a2 would make it 58. I could not read any more cos my eyes were going crossed and blurry. But I do think Deans might be a bit scared of a2 coming on the scene, and this could be the reason they want to buy it out -- to hide it in the bottom drawer - cos they have a lot to lose, if all their customers started understanding the a2 story. Correct me if I'm wrong. SW.

thats funny seeweed cos i read about the same number of pages but got a different take on it....to me debt was increasing while profit was dropping and only $16 million cash and that came from foreign exchange........maybe the different interpretation comes from your positive outlook but my not so slightly positive view after the odd takeover offer.....maybe someone with an accounting background can make sense of it....think im going to sell some more today

[baller18]

For the past few days there has been some off market trades before the opening.. One day there was a trader roughly around $1.5million dollars worth, and then another around 800k (can't remember exactly). Who is doing the buying? Anyone out there has any clues?

[robbo24]

For the past few days there has been some off market trades before the opening.. One day there was a trader roughly around $1.5million dollars worth, and then another around 800k (can't remember exactly). Who is doing the buying? Anyone out there has any clues?

The condition symbol is IN, so possibly transfers to ASX.

[NT001]

Yes, some blocks of shares have transferred to the ASX. For example, a list of the main NZX-registered shareholders no longer includes Freedom Foods. There has also been a drop recently in the number of shares held in custody by NZ Central Securities Depository (Reserve Bank), some of which would have been moved to ASX, although a few million have been sold down (eg by Milford and NZSF). Before the dual listing, NZCSD held 48% of ATM shares in custody, whereas a few days ago (just before the takeover talk) it held only 37%. With a dual registry it's a lot harder to keep track of share movements now.