The A2 Milk (ASX:A2M) share price climbs as China deal receives go-ahead

There have been several key events that have been unfolding in the milk company lately.

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The A2 Milk Company Ltd (ASX: A2M) share price finished yesterday’s session in the green.

A2 Milk shares finished yesterday at $6.95, a 0.9% gain from the previous closing price.

Whilst there was no market sensitive news yesterday, let’s take a closer look at what has unfolded for the company lately.

What is behind the a2 Milk share price lately?

A2 Milk says it received regulatory approval to acquire a 75% interest in Mataura Valley Milk on 5 July.

Approval came from the New Zealand Overseas Investment Office for A2’s stake in the New Zealand dairy nutrition company.

A key benefit to this deal, A2 Milk says that majority shareholder China Animal Husbandry Group (CAHG) will retain a 25% interest alongside the company.

CAHG is currently the majority shareholder in Mataura Valley Milk. It is also a wholly-owned subsidiary of China National Agricultural Development Group Co Ltd (CNADG).

According to A2, CNADG is also the parent company of China State Farm, A2’s distribution partner in China.

Investors can expect more updates on the acquisition when A2 Milk releases its full-year results in August.

Since the announcement on 5 July, the A2 Milk share price has climbed 6.6%.

A2 Milk share price snapshot

The A2 Milk share price has had a choppy year to date, posting a loss of 39%. This has extended the previous 12 month’s loss of 64%.

For context, the S&P / ASX 200 Index (ASX: XJO) has posted a 12-month return of 20%.

At the time of writing, A2 has a market capitalisation of $5.2 billion.

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The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia 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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