Recently, a2 Milk (ASX:A2M) confirmed that it has agreed a variation to its comprehensive manufacturing and supply arrangements with Synlait Milk Limited (ASX:SM1) and these variations were conditional on either NZX granting a waiver from the requirement to obtain shareholder approval under NZX Listing Rule 9.1.1 or shareholder approval being obtained. Initially, when it was announced in 2016, the supply agreement was for a minimum term of five years, with a rolling three-year term from 1 August 2018.
Now after some revisions, a two-year extension to the term of the agreement was given, effectively providing for a new minimum term of five years to 31 July 2023. Further, it increased the volume of IF products over which Synlait already has exclusive supply rights with an increase in the committed production capacity from Synlait. This extension was consistent with the global strategic supply strategy that a2MC has been developing over recent times, with supply partnerships that provide multi-site, multi-product and geographic diversification. This extension also reflects a2MC’s commitment to continue to build on the excellent relationship that both companies have enjoyed over recent years.
This will also provide the Company with security for nutritionals supply to its key markets that will be consistent with its overall strategic objective of maintaining high quality supply with ongoing cost-competitiveness. The agreement will continue to reinforce the two companies to have a good working relationship as they work to develop a2 Platinum® for the ANZ and China markets on an exclusive basis to a specified product volume. The stock price climbed up by 3.66 per cent and was trading at $10.75 (as on 3 July 2018; 03:21 PM AEST).
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated websites are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.