16 Aug 2021

Nestlé eyes A2 Milk, Australian media report

10:40 am on 16 August 2021

The specialty dairy company A2 Milk is in the takeover sights of an overseas buyer, according to an Australian media report.

Spoon with infant formula

Photo: 123rf

The Australian is reporting that Swiss milk product giant Nestlé has a close eye on the company but industry insiders do not expect any moves to be made on A2 until after it reports its annual result.

The paper said the multinational beverage company Kirin Lion had also taken a shine to A2 in the past, but the price was too high.

A2 Milk's market capitalisation had fallen from $16.1 billion to $4.7bn over the past year, as the pandemic disrupted sales of its infant formula to Chinese consumers through the daigou channel, falling infant births in China and excess supply of its products had curbed consumer demand.

The company had struggled to get on top of these challenges which resulted in it downgrading its earnings guidance four times in nine months.

This prompted the company to [https://www.rnz.co.nz/news/business/442238/a2-milk-launches-review-of-approach-to-chinese-infant-formula-market

launch a review] of its business and wrote down the value of between $80 million and $90m worth of stock.

It recently reorganised its Asia Pacific division, which makes up the majority of the business, into a China domestic division, an international export business and established an Australian & New Zealand arm.

A2 Milk will report its full year financial result on 26 August.

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