A2 Milk agrees to A$62m settlement in shareholder class action case

A2 Milk has reached an agreement in principle to settle a class action lawsuit.

Dual-listed infant formula and dairy company A2 Milk said it had reached an in-principle agreement to settle shareholder class action proceedings commenced against it in the Supreme Court of Victoria in 2021.

The two separate class action proceedings were consolidated in 2022.

The proceedings were commenced on behalf of shareholders who held an interest in fully paid ordinary shares between August 2020 and May 2021.

The Victorian proceedings related to the company’s disclosures and guidance for the 2021 financial year.

The agreed settlement amount is A$62 million ($75m), inclusive of interest and costs.

The full settlement amount will be met by available insurance proceeds, with no impact on 2026 earnings.

“In reaching this settlement, a2 Milk makes no admission of liability,” the company said in a statement to the NZX.

The settlement is subject to the finalisation and execution of a deed of settlement and approval by the Supreme Court of Victoria.

The issue centred on five statements made by the company between August 19, 2020, and May 10, 2021, in the midst of the Covid-19 pandemic, forecasting revenue and ebitda margin for the 2021 financial year.

The statements were made to the NZSX and ASX.

Initial pantry stocking of infant formula in its key market – China – resulted in a2 Milk’s share price hitting a record high of $21.51 in July 2020, but the stock later slumped to $4.34 because of the collapse of the unofficial daigou trade channel from Australia to the PRC.

Group proceedings were filed against a2 Milk in the Supreme Court of Victoria by Slater & Gordon Lawyers in October 2021 and by Shine Lawyers in November of that year, alleging the five statements were misleading and deceptive, and that A2 had breached its continuous disclosure obligations.

In late trading, a2 Milk’s shares were quoted on the NZX at $11.25, down 15c.

Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.

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