The a2 Milk Company is set to return $300 million to shareholders after securing Chinese regulatory approval that finalises its acquisition of the a2 Pokeno infant formula facility in New Zealand.
The dual-listed company (ASX: A2M; NZX: ATM) said China’s State Administration for Market Regulation (SAMR) had approved the transition of two China label infant milk formula (IMF) product registrations, acquired with the Pokeno plant, to a2 branded products.
a2 described the approval as the final step under the acquisition terms for the registrations to be used under the a2 brand. With the regulatory approvals now obtained, the company said it no longer has the right to unwind the Pokeno purchase, removing a key contingency from the deal.
The facility deepens a2’s move into in-house infant formula manufacturing, which the company links to advanced nutritional manufacturing capability and vertical margin capture.
New products are expected to launch later this calendar year, with no change to the timing or estimated financial benefits flagged when the acquisition was announced.
“SAMR approval marks a significant milestone in our China growth strategy and Supply Chain transformation. It supports long-term growth in our core IMF business through market access and innovation, accelerates the development of advanced nutritional manufacturing capability, and captures attractive financial returns through incremental brand contribution and vertical margin capture,” managing director and chief executive, David Bortolussi, said.
With the China label approvals secured, a2 said its board is expected to convene soon with the intent to declare a $300 million special dividend, fully franked and unimputed. The timing of payment and other details will be confirmed in a separate announcement once the dividend has been declared.
