One of the sharemarket’s best-performing stocks, A2 Milk Company, has settled out of court with Lion Dairy & Drinks over a long-running dispute about the rights to use the term “A2 protein” on labels.
By: Jemima Whyte
Source: The Australian Financial Review
A2 Milk and Lion Dairy & Drinks did not provide details about whether Lion – which is owned by Japanese brewing giant Kirin Corporation – will continue to use A2 on its Pura and Dairy Farmers milk labels.
It is understood A2 would not have settled without Lion agreeing to remove the term “contains A2 protein” from its labels, and it is expected Lion will change its labels in the next two months. It is unclear whether Lion will simply amend the labels to read “contains A1 and A2 proteins” or something similar.
A2 Milk argued Lion was engaging in misleading and deceptive conduct by including the statement “contains A2 proteins”, as its milk also contains A1 proteins.
“The parties have mutually agreed not to proceed with their cases against each other. The terms of the settlement are confidential. The parties are very satisfied with the outcome and will remain focused on building and maintaining the strength of their individual brands,” the companies said in a statement.
In late August Lion lodged cross-claims with the court arguing A2’s representations that A2 milk makes many customers feel better than normal milk are false.
A2 chief executive Geoffrey Babidge, who declined to comment further when contacted, said last month the company would consider paying dividends after reporting its net profit had increased by 138 per cent in the first four months to October to $NZ52.3 million ($47.5 million). Earnings before interest, tax, depreciation and amortisation rose 120 per cent to $NZ78.4 million while revenue climbed 69 per cent to $NZ262.2 million.
A2 Milk shares were down 1.4 per cent to $7.26 in early trade on Thursday morning.