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Why the Bubs Australia Ltd share price is climbing again

Shares in goats milk and organic baby formula business Bubs Australia Ltd (ASX: BUB) are up 8% to 76 cents today after the group announced it has completed the acquisition of NuLac Foods Ltd.

Bubs claims that the deal secures exclusive milk supply from Australia’s largest herd of milking goats and helps Bubs in its ambitions to become a vertically integrated retailer where it has control over all parts of its supply chain from the farm to the supermarket.

To fund the acquisitions Bubs raised $20 million at 60 cents per share, with shares changing hands for 76 cents on the last trading day before the Christmas holidays. The group reported total revenues of $1.48 million for the quarter ending September 30 2017, which represents growth of 25% on the prior quarter.

Other baby formula businesses listed on the ASX that have recently moved to secure their supply chain on the back of growing demand include Bellamy’s Australia Ltd (ASX: BAL) and the a2 Milk Company (Australia) Ltd (ASX: A2M).

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Motley Fool contributor Tom Richardson owns shares of A2 Milk. 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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