The A2 Milk Company Limited’s (ASX: A2M) stock edged up 0.837 per cent on August 03, 2018 after the announcement of lift in stake in its partner, Synlait Milk Limited. According to the release, the group will lift its shareholdings in ordinary shares of Synlait Milk Limited from 9.11% to 17.39%. The increased investment represents a strong relationship and long-term commitment of both organisations. The group revealed that it will acquire extra 8.3 per cent of the fully paid ordinary shares through its subsidiary in Synlait Milk for NZ $14,840,527. Further, the group is eyeing the stake from Mitsui & Co at a price of NZ $10.90 per share; and this would be for the total consideration of about NZ $161.8 Mn. This will be a modest discount to the NZX one-month volume weighted average price of NZ $11.16.
This move comes after the reaffirmation by A2M on its infant formula and other nutritional products supply agreement with Synlait as per July 2018 update. The supply agreement has been flagged to be cornerstone of its commercial relationship with Synlait. The investment enhancement is also as per A2M’s commitment to long-term supply arrangements with high quality partners including Fonterra Co-operative Group.
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