A2 plans shift to NZX main board

Last updated 17:28 20/11/2012

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Milk marketer A2 Corporation has outgrown the junior market and has its eye on joining the stock exchange main board as a member of the NZX50 index.

At its annual meeting in Auckland today, A2 managing director Geoff Babidge gave a presentation outlining plans to shift from the AX to the NZX main board.

The move would provide greater liquidity and better access to capital, he said.

"To this end, the company has commenced discussions with the NZX."

The move is expected to occur by Christmas.

A2 shares were unchanged on the day at 65c, giving the company a market capitalisation of $393 million.

At that level it is bigger than several NZX50 index constituents, including new entrant Steel & Tube, Cavalier, Restaurant Brands, Heartland NZ, Skellerup and Hallenstein Glasson.

As an index member, A2 Corp would become more attractive to institutional investors.

However, it is not clear whether A2 would meet the liquidity requirements of an index member - 51.4 per cent of A2 is held by controlling shareholders Freedom Foods and Cliff Cook's investment company Mountain Road, and its shares are relatively thinly traded.

A2 markets milk containing only the A2-type of beta-casein, while standard milk contains the A1 type.

Research is so far inconclusive on the health benefits of A2 milk, but many consumers believe in its qualities.

In Australia, where A2 has distribution in major supermarkets, sales have grown significantly and are forecast to reach A$34m ($43m) in the first half of 2013, up from A$27.7m in the second half of 2012.

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- BusinessDay.co.nz

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