A2 Milk looks to buy majority stake in Mataura Valley Milk

The deal would be worth around $270 million.
The deal would be worth around $270 million. Photo credit: Getty

A2 Milk announced on Friday it's in discussions with Mataura Valley Milk to acquire 75.1 percent of the company, a stake worth around $270 million.

"Due to the increasing scale of our infant nutrition business, we have been assessing participation in manufacturing capacity and capability," said A2 Milk's chief executive Geoff Babidge.

Currently the major shareholder in Mataura Valley Milk is China Animal Husbandry Group (CAHG), which owns 78.6 percent. Babidge said if the deal were to go ahead, CAHG's stake would be reduced to 24.9 percent. 

"The potential investment in Mataura Valley Milk's recently commissioned facility, alongside CAHG, aligns with this strategic objective as we look to complement and build upon our current strategic relationships with Synlait Milk and Fonterra Co-operative Group, which remain in place," said Babidge.

"Our intention would be to invest further to establish blending and canning capacity at Mataura's facility to support the establishment of a fully integrated manufacturing plant for infant nutrition."

A2 Milk produces dairy products from milk that don't have A-1 protein, making it easier to be digested and absorbed by some people.

Earlier this month the company posted a record profit of $385.8 million. 

Mataura Valley, in turn, has struggled recently, posting a loss of $47.1 million in the year ended December.

Babidge said discussions around the potential deal were "ongoing and remain incomplete".