The New Zealand company Synlait Milk and the A2 Milk Company, producer of among other things baby food, have resolved their disputes over the milk price and exclusivity. They want to continue working together on the production of baby food for the Chinese market, and A2 Milk is supporting Synlait in refinancing. However, A2's stock price crashed shortly after the issue was resolved.
Both companies were at an impasse for a long time regarding their dispute. The agreement did not bring relief to both parties.
Dairy company Synlait has run into financial difficulties and is trying to secure refinancing of around $130 million. This requires the approval of the two largest shareholders, Chinese Bright Dairy (39% shares) and A2 Milk Company (19.8%).
An agreement from the latter company has now become possible as a recent settlement has been reached regarding a dispute over the supply of raw materials and the price. A2 Milk Company wanted to get rid of the conditions that it would have to exclusively source raw materials from Synlait. Later, they also disagreed on the price of the raw materials. This has now been resolved.
This should also be good news for A2 Milk Company. Especially after the company also announced positive figures for the (broken) fiscal year 2024. Revenue increased by 5.2% to NZ$1.675 billion, which is equivalent to €921 million. Net profit increased by 7.7% to NZ$167.6 million. The company is doing well in the Chinese market and is one of the 5 largest importers of baby food there.
However, the company's stock price fell by 24% after the announcement of these figures, as the result was worse than expected.