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20 Mar 2018 20:33
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  •   Home > News > Rural

    A2 shares jump 25pc on Fonterra deal

    Shares in the a2 Milk company have spiked 25 per cent following its positive first-half results and news of a supply deal with Fonterra.


    A2 Milk Co shares jumped 25 per cent on Wednesday, making the milk marketing firm New Zealand's biggest listed company on a deal that will give it backing from Fonterra.

    The stock gained $2.31 to $11.60, valuing a2 Milk at $8.47 billion, toppling Auckland International Airport at $7.75b, Fisher Paykel Healthcare at $7.37b and Meridian Energy at $7.29b.

    The spike underpinned the S/NZX 50 index, which gained 1.5 per cent to 8215.63 as at 2.35pm.

    A2 unveiled a strategic partnership with the world's biggest dairy exporter agreeing to exclusively supply a2 with A1 protein-free milk products in bulk powder and consumer packaged forms, in exchange for an exclusive licensing agreement to produce, sell and market a2 branded fresh milk for end sale in the New Zealand market.

    They'll set up an A1 protein free milk pool in Australia and Fonterra also gets exclusive supply rights for some products in new markets for a2 in South East Asia and the Middle East up to a specified volume.

    "It was a pretty significant announcement for a2 and shows their growth can move by a lot quicker than past opportunities with Synlait Milk," said Grant Williamson, a director at Hamilton Hindin Greene in Christchurch.

    "The Australian investors in particular just like this company."

    Synlait shares sank 11 per cent to $6.31, having followed a2 higher through 2017 on expectations the close supply arrangement would see the milk processor benefit from the growing demand for the marketing firm's branded products.

    Units in the Fonterra Shareholders Fund gained 0.8 percent to $6.05.

    © 2018 NZN, NZCity

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