The a2 Milk Company Ltd (ASX: A2M) share price is trading more than 4% higher this morning. Over the last month, a2 Milk shares have fallen around 10.24%.
About a2 Milk
The a2 Milk Company is one of Australia and New Zealand’s largest infant formula producers and the leader in a2-only protein-based dairy products. It has operations in New Zealand, Australia, USA and China thanks to key supply and distribution agreements.
What Happened Today?
Bellamy’s Australia Ltd (ASX: BAL), a major competitor to a2 Milk, announced a Scheme Implementation Deed this morning for China Mengniu Dairy Company Limited (SEHK: 2319) to acquire the company for a price of $13.25 per share.
This offer price represents a 59% premium to the closing price on 13th September and the offer has pushed Bellamy’s shares more than 50% higher today.
a2 Milk shares have also pushed higher, which could be for a number of reasons. Investors may view the acquisition as a chance for a2 Milk to get ahead while Bellamy’s is tied up in the regulatory process of getting the acquisition approved.
It’s also possible that investors are hopeful of a takeover offer for a2 Milk if there’s a company willing to pay a similar premium.
Alternatively, and arguably more likely, shareholders may simply view the acquisition and high offer price as confirmation that the Chinese infant formula market is strong, which a2 Milk stands to benefit from.
Either way, it seems both Bellamy’s shareholders and a2 Milk shareholders will be happy this morning.
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).
Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.