The dairy company will settle a long-running class action over earnings guidance without admitting wrongdoing.
The a2 Milk Company has agreed to pay A$62 million to settle a class action brought by investors over alleged misleading conduct linked to its financial guidance during FY21. The settlement ends a legal dispute that began in 2021, although the company has not admitted liability or wrongdoing.
The class action was launched by Slater and Gordon and Shine Lawyers on behalf of shareholders who purchased a2 Milk stock between August 2020 and May 2021. Investors claimed the company failed to properly disclose factors that were affecting its business outlook while issuing a series of earnings forecasts to the market.
During that nine-month period, a2 Milk issued four separate earnings downgrades as trading conditions weakened. The lawsuit alleged that the company should have known its FY21 guidance did not fully reflect the risks facing the business, particularly as financial performance deteriorated and investor confidence declined.
The legal proceedings were combined into a single case in 2022 and were scheduled to go to trial on June 2. However, the parties reached an in-principle agreement this week, avoiding a lengthy court battle. According to the company, the A$62 million settlement includes interest and legal costs.
a2 Milk said the entire settlement will be covered by existing insurance proceeds, meaning there will be no effect on the company’s FY26 earnings. The agreement closes one of the most closely watched corporate disputes in Australia’s dairy sector after the company’s share price fell 62% during FY21.
Source: The Weekly Times – https://www.weeklytimesnow.com.au/agribusiness/a2-milk-company-settles-investor-class-action-lawsuit-for-62-million/news-story/51af2290118d841894dbf8ab9768897e
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