The Overseas Investment Office has given consent for the a2 Milk Company to take a 75% stake in dairy nutrition business Mataura Valley Milk, near Gore.
The Australian Financial Review has reported the deal — which was announced last August — was worth $NZ270million. It would take effect from the end of this month.
A market release from a2 Milk this week said MVM’s majority shareholder, China Animal Husbandry Group (CAHG), would retain a 25% interest in the company.
CAHG is a wholly owned subsidiary of China National Agriculture Development Group Co Ltd which was also the parent company of a2 Milk’s strategic logistics and distribution partner in China, CSFA Holdings Shanghai Co Ltd.
Last year, Mataura Valley Milk said it needed additional funding to continue operating as it faced a projected deficit of $26million by that end of the year. The company, which moved into production at its McNab site in 2018, reported a $47million net loss for the year ending December 31, 2019.
In 2019, it initiated a search for a strategic shareholder to invest alongside existing shareholders. The search targeted possible investors with the capacity of investing $100million to $150million and also accelerate the company’s nutritional strategy through supply agreements for nutritional product.
A2 Milk’s release said the acquisition would provide the opportunity for the company to participate in nutritional products manufacturing, provide supplier and geographic diversification, and strengthen its relationship with key partners in China.
A further update would be provided when a2 Milk released its full-year results in August. In May, The New Zealand Herald reported shares in the former sharemarket darling took a battering after the alternative dairy company slashed its revenue and earnings forecasts for the 2021 financial year. It was its fourth consecutive downgrade.
The dual-listed company was now targeting revenue for 2021 of $1.20billion to $1.25billion, down from an earlier forecast of $1.4billion.
