A2 Milk completes purchase of Mataura Valley Milk

Mataura Valley Milk's Southland site. Photo / Supplied

A2 Milk said it had completed the acquisition of a 75 per cent interest in Southland dairy nutrition company, Mataura Valley Milk (MVM), from China Animal Husbandry Group (CAHG), which will retain a 25 per cent interest.

The terms of the transaction were consistent with those previously advised, with a2 Milk paying $268.5 million, payable from cash reserves, for the majority holding.

At its last interim results announcement in February, a2 Milk said its cash reserves were a healthy $774.6m.

A2 Milk's move into manufacturing is in part aimed at lessening its reliance on its current sole infant formula provider, Synlait Milk, in which it has a 20 per cent stake.

The company has said the MVM move would provide supply diversification, further strengthen relationships with key strategic partners in China, and offer access to manufacturing margins over time.

CAHG is a subsidiary of China National Agriculture Development Group, which is the parent of a2's strategic logistics and distribution partner in China, CSFA Holdings Shanghai (China State Farm).