Why the Wattle Health Australia Ltd share price rocketed 12% higher today

The Wattle Health Australia Ltd (ASX:WHA) share price has been a huge mover on the market today. Here's what you need to know…

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One of the biggest movers on the market today has been the Wattle Health Australia Ltd (ASX: WHA) share price.

In morning trade the fledgling health and wellness food company's shares are up 12% to 65 cents.

What happened?

This morning the company's shares emerged from their voluntary suspension after it announced the successful raising of $9.1 million through a placement of shares.

The placement was extremely oversubscribed, with total bids received being in excess of $20 million.

As a result of this high demand, subject to shareholder approval, Wattle Health has decided to offer an additional $3.3 million worth of shares at 56 cents each. Combined, this will take the total amount raised to $12.4 million.

The company intends to use these funds to acquire an interest in CNCA licensed manufacturer Blend and Pack and fund its joint venture with Organic Dairy Farmers of Australia.

Should you invest?

I think that having access to a CNCA licensed manufacturer is a big win for the company considering the insatiable appetite for Australian infant formula in the Chinese market.

But it does face significant competition from the likes of Bellamy's Australia Ltd (ASX: BAL), a2 Milk Company Ltd (Australia) (ASX: A2M), and even Bubs Australia Ltd (ASX: BUB) both at home and abroad.

If the company can carve out a decent market share in China then I believe the sky really is the limit for its shares. But until sales data backs up its strong potential, I intend to watch on from the sidelines with a keen interest.

Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia owns shares of A2 Milk. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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