Shares in The a2 Milk Company were the top gainer on the sharemarket on Tuesday after a speculative media report that the specialist milk marketer could be a takeover target.
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SUPPLIED Some investors were willing to take a punt on a potential takeover of a2 Milk, pushing the company’s shares up.

A2 Milk shares were up 6.6 per cent to $5.81 in mid-afternoon trading on the NZX, valuing the company at $4.3 billion. The Australian newspaper speculated in its Dataroom column that Canadian dairy company Saputo could be eyeing up the acquisition of Jalna Dairy Foods or a2 Milk.

A2 Milk’s shares have lost almost half their value over the past year after a run of earnings downgrades dented investor confidence. A2’s success in the large infant formula market in China hit the skids after the Covid-19 pandemic closed international borders, shutting a key route to market, and it faced increased rivalry and weaker demand.

“The share price of a2 has taken a bit of a jump today on takeover speculation and I guess time will tell as to whether that’s true,” said Hamilton Hindin Greene investment adviser Grant Davies. “It definitely falls into the speculative side of rumours.

“Investors should not be counting their chickens yet with nothing really substantiated.”

Some investors were obviously willing to take a punt on the potential of a takeover, he said.

A2 Milk did not comment on market talk, a spokesman said.

It is not the first time takeover talk has swirled around the beleaguered stock. In August last year, The Australian reported that a2 Milk had been on the radar of potential suitors which it spruiked as Swiss multinational Nestle and Kirin’s Lion.

A2 Milk is due to report its first-half earnings in February.

“Investors will be looking at that very very closely to see whether they have stemmed the bleeding and see if they are growing in their respective categories again,” Davies said.

He said a2 would need “a few reasonable updates” to earn back investor trust.

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