A2 Milk shares jump on media report, it could be a takeover target

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Some investors were ready to take a punt on a possible takeover of a2 Milk, sending shares of the company soaring.

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Some investors were ready to take a punt on a possible takeover of a2 Milk, sending shares of the company soaring.

Shares of The a2 Milk Company were the biggest winners in the equity market on Tuesday after a speculative media report that the milk marketer could be a takeover target.

Shares of A2 Milk rose 6.6% to $5.81 by mid-afternoon on the NZX, valuing the company at $4.3 billion. The Australian newspaper speculated in its data room column that Canadian dairy company Saputo may consider acquiring Jalna Dairy Foods or a2 Milk.

Shares of A2 Milk have lost nearly half their value over the past year after a series of earnings downgrades have shaken investor confidence. A2’s success in China’s large infant formula market went off the rails after the Covid-19 pandemic closed international borders, closing a key route to market, and it faced increased rivalry and to lower demand.

“The a2 share price jumped today on takeover speculation and I guess time will tell if that’s true,” said Grant Davies, investment adviser to Hamilton Hindin Greene. . “It definitely falls into the speculative side of the rumours.

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“Investors shouldn’t be counting their chickens yet without anything really backed up.”

Some investors were clearly ready to take a kick out of the potential for a takeover, he said.

A2 Milk did not comment on market talks, a spokesperson said.

This isn’t the first time talk of a takeover has swirled around the beleaguered stock. Last August, Australian reports that a2 Milk had been on the radar of potential suitors he pitched like Swiss multinational Nestlé and Kirin’s Lion.

A2 Milk is due to report its first half results in February.

“Investors will be watching this very, very closely to see if they’ve stemmed the bleeding and see if they’re growing again in their respective categories,” Davies said.

He said a2 would need “a few reasonable updates” to regain investor confidence.

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