A2 Milk (ASX:A2M) share price lower amid ex CEO drama

The A2 Milk (ASX:A2M) share price opened higher today as stories about comments made by the last CEO surfaced. Here’s what we found out.

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A2 Milk Company Ltd (ASX: A2M) shares opened higher today but have since retreated. At the time of writing, the A2 Milk share price is trading 0.12% lower at $8.68. This comes as previous CEO Jane Hrdlicka continues to make headlines over her comments published in Good Weekend on 12 March.

The comments were not well received by the current A2 Milk chair, David Hearn, and follow Hrdlicka’s December 2019 shock exit from the company.

CEO drama

According to today’s The Australian Financial Review (AFR), shots are being fired between the previous A2 Milk CEO and current chair David Hearn.

AFR reports that Hearn believes Hrdlicka’s interview contains “falsehoods” and “mistruths”. He wrote a letter to Hrdlicka on Monday this week demanding she retract some of her comments.

When Hrdlicka ignored the request, Hearn then sent the letter to the Sydney Morning Herald on Tuesday 16 March. No public response has been issued to date.

AFR adds that Ms Hrdlicka, however, released the following statement:

The information in the letter contains false statements, is contextually incorrect and designed to inflict maximum damage on me personally. I wrote to Mr Hearn today seeking clarification and further information on a number of matters and have not yet received a reply.

What did the letter say?

AFR further discusses that, in his letter, Mr Hearn raised three “falsehoods”. He claims that Hrdlicka was dishonest about consultants she appointed, why she left A2 Milk and how the company’s IT team is set up.

He points out that Hrdlicka used roughly 80% of a NZ$33 million budget hiring consultants from Bain & Company, where she had previously worked. According to AFR, Hearn said that Bain & Company was hired by Hrdlicka without her having consulted the executive committee.

Hrdlicka disputed these previously made accusations during the Good Weekend interview. 

Mr Hearn concluded his letter advising that Ms Hrdlicka is now in breach of her signed separation deed. If she continues interacting with the media regarding A2 Milk, the letter implies there will be legal ramifications.

A2 Milk share price snapshot

Over the past year, the A2 Milk share price has fallen by around 43% amid ongoing woes surrounding the company’s daigou channel. Year to date, A2 Milk shares have also fallen by nearly 26%.

Based on the current share price, the company has a market capitalisation of around $6.5 billion with 743.4 million shares outstanding.

Motley Fool contributor Gretchen Kennedy has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended A2 Milk. 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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