The Company Acquires a Key Manufacturing Plant from Yashili While Divesting Its Stake in Mataura Valley Milk to Streamline Operations.
In a landmark strategic move reshaping the New Zealand dairy economics landscape, The a2 Milk Company has finalized two major transactions. The company has purchased a manufacturing plant from China’s Yashili in a deal valued at $282 million. This acquisition is a long-anticipated step toward building its own manufacturing capabilities. Simultaneously, a2 Milk has divested its stake in Mataura Valley Milk to competitor Open Country Dairy, an unexpected move that will result in a book loss but is seen as a way to optimize its asset portfolio.
The acquisition of the Yashili plant in Pōkeno is the central part of a2 Milk’s supply chain transformation. The 30,000-square-meter facility, opened in 2015, comes with two valuable China-label infant formula registrations. The company plans to invest an additional $100 million in a multi-year capital program to increase the site’s capacity and capabilities, with a goal of employing over 100 people. This move allows a2 to take greater control over its production and reduce reliance on third-party manufacturers like Synlait Milk.
The decision to sell its stake in Mataura Valley Milk (MVM) is a key piece of data journalism that signals a shift in the company’s long-term strategy. The sale to Open Country Dairy, valued at $100 million, will result in a loss of approximately $130 million for a2 Milk, which had originally bought a 75% stake in MVM for $268.5 million in 2021. The company’s CEO stated that while MVM has “significant potential,” it was no longer the “optimal asset and pathway to achieve our strategic objectives.”
Central to these transactions are new supply agreements that secure The a2 Milk Company’s future operations. Fonterra, the country’s largest dairy cooperative, will supply the milk for a2 under a long-term agreement, providing a secure source of its key A1 protein-free milk. The deal also includes an exclusive arrangement for Fonterra to buy back unused bulk liquid cream. Furthermore, as part of the MVM sale, a2 Milk will remain a significant customer of the facility, ensuring a continuous supply of its A1 protein-free milk powder.
These strategic shifts come at a time of strong financial health for a2 Milk. The company reported a revenue increase of 13.5% to $1.9 billion for the 12 months to June, with net profit after tax up 21.1% to $202.9 million. In addition to these strong results, the company announced a $300 million special dividend to shareholders. The combination of its divestment, acquisition, and strong financial performance demonstrates a clear focus on building a “better, higher growth, lower risk, end-to-end business” in the competitive agribusiness sector.
Source: BusinessDesk, “The a2 Milk Company buys Yashili NZ, divests Mataura Valley Milk to Open Country Dairy”
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