NZ's Synlait and a2 Milk settle dispute over infant formula manufacturing rights (updated)

Synlait Milk

16/08/2024 01:03

(Adds further details on settlement from paragraph 2 onwards)
       Aug 16 (Reuters) - New Zealand's Synlait Milk  SML.NZ 
and its shareholder a2 Milk  ATM.NZ  have conditionally resolved
disputes over exclusive manufacturing rights for some of a2
Milk's infant milk formula products, the companies said on
Friday.
    A2 Milk, Synlait Milk's second-largest shareholder with a
19.83% stake, issued cancellation notices in September last year
regarding their manufacturing and supply agreement, which was
signed more than seven years ago to increase production of some
infant formula products.
    Synlait has now acknowledged the validity of these notices
and said its exclusive rights to manufacture and supply stages 1
to 3 of a2 Milk's current infant milk formula products will come
to an end on Jan. 1, 2025.
    Despite the loss of exclusivity, Synlait has obligations to
procure a minimum annual volume of products and maintain certain
priority arrangements for a2 Milk, the companies said in
separate statements.
    Under the settlement, "Synlait continues to hold the Chinese
regulatory State Administration for Market Regulation (SAMR)
registration which is attached to Synlait's Dunsandel
manufacturing facilities," a2 Milk said in its statement.
    "The parties have agreed to resolve the various pricing and
other disputes between them with a2MC to make a one-off payment
to Synlait of NZ$24.75 million ($14.81 million)," a2 Milk said.
    Synlait's settlement hinges on successfully completing its
equity raise and refinancing its banking facilities, with a2
Milk committed to supporting the issuance, the companies said.
    The arbitration hearing has been adjourned and will be
discontinued if the settlement conditions are met.
($1 = 1.6711 New Zealand dollars)

 (Reporting by Roushni Nair in Bengaluru; Editing by Shilpi
Majumdar and  Subhranshu Sahu)
 ((Roushni.Nair@thomsonreuters.com;))