What Would Synlait Be Worth to Fonterra or a2 Milk?
Speculation of a possible joint move by Fonterra and a2 Milk to buy Synlait raises a much bigger strategic question, says agribusiness expert Dr Nic Lees.
It needs the milk because further planning and a small investment in plant and equipment has created an opportunity to increase production capacity of ingredient products without impacting infant formula or nutritional product business, it says.
The extra milk will take intake and production of ingredient products higher than stated in June in its prospective financial information issued ahead of its IPO (initial public offering) and subsequent stock exchange listing on July 23.
Synlait says that while it's early in the 2013/14 season, the additional milk processed gives the company increased confidence of achieving its forecast financial result for 2014.
The total volume of milk expected to be taken is still to be finalised however DIRA permits an allocation of up to 50 million litres.
Synlait Milk will provide a general update September 24 when its annual result for the year ending 31 July 2013 is announced. Fonterra says it will announce its annual result September 25.
