ATM - A2 Milk Corporation Limited

[NZSilver]

Can you please post kirk???

[NZSilver]

Of interest https://www.marketingmag.com.au/hubs...milks-success/

[NT001]

http://m.theaustralian.com.au/busine...-1227426099772

I'mnot a subscriber tothe Australian, so can't access the story, but here's a statement issued by Deans that I assume the report is based on. It puts a different perspective on the analysis posted yesterday that questioned Dean Foods' ability to fund a major investment acquisition.

http://www.marketwatch.com/story/dea...ies-2015-03-26

[Kirk]

http://m.theaustralian.com.au/busine...-1227426099772

The US-listed Dean Foods looks set to provide a strong financial ally for Freedom Foods in its play for a2 Milk after completing a *refinancing that delivered it $US1 billion ($1.3bn) in total revolving debt *facilities.
Dean Foods has entered into a new $US450 million senior secured revolving credit facility that includes a provision to raise the amount of the revolving *facility by up to $US200m.
The company has also amended and restated its existing $US550m receivables securitisation facility to extend the maturity by another three years.
At the time of the refinancing earlier this year Dean Foods chief executive Gregg Tanner said the company had the “capital structure that is more appropriate for a company of our size and industry position and that gives us the flexibility to fund our operational and strategic objectives to generate long-term shareholder value”.
Chief financial officer Chris Bellairs also noted that as fast Dean Foods “levered up in 2014, we’re beginning to lever down in 2015’’.
He added that for covenant purposes, the company’s cash on hand exceeded its senior secured indebtedness and its senior secured net leverage ratio was zero times.
Dean Foods and Freedom made an informal approach to buy a2 late last month after Freedom’s key backer, the billionaire Perich family, indicated it was concerned about a2’s expansion strategy.
The a2 board was scheduled to meet overnight in London, but nothing concrete was expected to emerge regarding the Freedom and Dean Foods approach at this stage.
There have been questions about the Perich family’s willingness to finance a full takeover bid for a2. Family patriarch Tony Perich is believed to have said the company has $100m in cash to put towards a tilt at the milk company. The Perich family owns 56 per cent of Freedom, while Freedom itself has 18.6 per cent of a2. The Perich family also directly owns a 1.3 per cent stake in a2. Freedom is also talking to its Chinese partner, New Hope Dairy, about helping finance a bid.
Seeking Alpha, a US-based crowd-sourced content service for financial markets, this week carried a report questioning the strategy of Dean Foods after its shares fell 15 per cent this year.
It claimed falling milk consumption and fluctuating prices would act against the US firm and noted it was also facing stiff competition in the plant-based non-dairy beverages industry.
It claimed that while the approach to a2 was a “step in the right direction’’, it added that “the space is extremely competitive and Dean Foods will find it difficult to win market share from peers due to its late entry’’ into the dairy alternative beverage market, which is projected to grow to $US14bn in sales by 2018.
Dean Foods last month moved to consolidate its more than 30 milk brands under one national banner known as DairyPure. Advertising for Dean’s DairyPure brand has *focused on a “fresh from your local dairy’’ image, stressing it has no antibiotics and comes from cows free of growth hormones. Dean has 36 per cent of the US milk market and is the nation’s largest milk processor by sales, which have declined.

[NT001]

Thanks Kirk. Interesting new stuff in there.

[Nasi Goreng]

You can understand why Deans would want this go through particularly with declining volumes. A positive A2 message and a welcome back to milk campaign could do wonders over the next few years for them plus licensing opportunities for other continents.

On the other hand, Fonterra would be fools to let this go through. I wonder if they could go for a mega merger and buy Deans plus ATM or a significant stake in both. If global supply is increasing, A2 could be the perfect way to differentiate themselves against the rest of the pack.

Either way, Fonterra needs to do something to substantially turn around their business. Cutting costs and headcount can only do so much.

[baller18]

How can fonterra take a large stake in both? Their market cap is 500mil

[stoploss]

How can fonterra take a large stake in both? Their market cap is 500mil

The Co-Op is worth much more ........

[Nasi Goreng]

I hear borrowing rates are quite low at the moment.

[Nasi Goreng]

I can't imagine any of the shareholders are that happy at the moment. Dairy prices are dropping at about twice the speed of the NZD and Fonterra have played things really badly.

Imagine 5 years from now increased demand for A2 and NZ not even being in the game.