Freedom Foods has reaped $64 million from the sale of its remaining stake in its former takeover target, The A2 Milk Company.
A2 Milk's share price has risen by more than 30 per cent over the past week as news emerged of supermarket shortages of its increasingly popular Platinum-brand baby formula.
Freedom, which recently sold down its 19 per cent A2 stake to fund the purchase of Victorian muesli manufacturer, Popina Foods, said at the time that it would hang on to a strategic stake in the company.
However, Freedom Foods has instead sold the remaining ten per cent A2 stake at a price of 85c per share, realising around $64m before capital gains tax.
“The proceeds from the sale of this holding will be used by the group to invest in the ongoing significant capital expenditure programme currently being undertaken or planned and as outlined in earlier publications or announcements, which is consistent with the group's growth strategy,” Freedom Foods said.
The company noted its recent statement that it intended to maintain a strategic stake, but said the recent share hike had led the company to "form the view that the opportunity cost arising from the market value of the funds now employed in the holding would now be better utilised by being applied to activities and businesses in respect of which the Group has either 100 per cent ownership or significant ownership and control interests.”
The company said it will continue to provide A2 Milk with production capabilities and milk supply through itsgroup and associated entities.
A2 Milk recently announced its first four months' trading performance for infant formula in ANZ and China were well ahead of plan.
