Synlait and a2 Milk Company extend deal

By Jim Cornall

- Last updated on GMT

The companies have signed up for a two-year extension to the terms of the existing agreement.
The companies have signed up for a two-year extension to the terms of the existing agreement.
Synlait and The a2 Milk Company have agreed to an extension to their long-term infant formula supply agreement.

The supply agreement for a2 Platinum infant formula and other nutritional products, announced on August 23, 2016, provided for a minimum term of five years, with a rolling three-year term from August 1, 2018.

The key components of the revised agreement are: a two-year extension to the term of the agreement, effectively providing for a new minimum term of five years to July 31, 2023; an increase in the volume of infant formula products over which Synlait already has exclusive supply rights; increased committed production capacity from Synlait; and, pricing terms that reflect an ongoing market-competitive pricing regime.

‘Closer together’

The agreed variations are conditional on either New Zealand’s stock market, NZX, granting a waiver from the requirement to obtain shareholder approval under NZX Listing Rule 9.1.1 or shareholder approval being obtained.

John Penno, managing director and CEO of Synlait, said the success of the a2 Platinum product has exceeded all expectations over the past two years.

“This step is about bringing Synlait and The a2 Milk Company closer together in anticipation of continued growth,”​ Penno said.

“It also puts both companies in a great position to further leverage the Chinese Food and Drug Agency (CFDA) registration of a2’s infant formula products, which was achieved in September 2017.”

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