Freedom Foods in takeover bid for A2

Freedom Foods Group made a takeover offer for the dual-listed alternative dairy company, A2 Milk.

Australia's Freedom Foods Group said it had, with an unnamed "leading international liquid dairy milk company", made a takeover offer for the dual-listed alternative dairy company, A2 Milk.

Freedom, which is involved in the health food-organic food trade in Australia, said it had put forward an indicative, non-binding and conditional expression of interest to A2 Milk with a view to undertaking a due diligence book checking exercise.

"This process is ongoing and there is no certainty that an offer will be forthcoming," Freedom said.

Freedom Foods already owns slightly more than 19 per cent of A2 Milk - just under ASX's threshold which stipulates that an offer must be made if 20 per cent is exceeded.

The Australian company has strong commercial ties to A2 through its largest shareholder, New Zealand's Perich Group.

A2 Milk said it had received an expression of interest from two associated trade parties to take over the company.

A2 Milk's shares climbed 23 per cent to 70c on the NZX, the highest level since July last year, before retreating to 66c at the local close.

Early this month, Freedom Foods raised its stake in A2 Milk to 19.15 per cent from its previous holding of 17.83 per cent.

A2 Milk has been a popular port of call for fund managers - First NZ Capital and Milford Asset Management have revealed substantial shareholdings this month.

"We have had it in our portfolio for some time and we can certainly see opportunities forming, because of the huge shift in consumer sentiment at the moment," Harbour Asset Management analyst Oyvinn Rimer said.

A2 Milk specialises in milk that carries the A2 type of beta-casein protein rather than the A1 protein commonly found in regular milk.

The proposal is subject to conditions including due diligence, exclusivity, no material adverse change in the company's affairs, New Zealand Overseas Investment Office approval, and there being no change in the number of shares on issue.

The company markets its products as beneficial for people who suffer intolerance to the naturally occurring A1 protein in milk. A2 Milk has captured 9.3 per cent of the Australian fresh milk market by selling milk that only has A2 protein. NZME, BusinessDesk