Dunedin-founded biotechnology company A2 seems destined to disappear following an announcement yesterday it was in merger discussions with its Australian counterpart, Freedom Nutritional Products.
Freedom has the exclusive rights for the production and sale of A2 milk in the Australian, Japanese and United Kingdom markets, in association with A2 in New Zealand.
The deal was termed an all scrip-based "merger of equals" under which the surviving entity would remain listed on the ASX.
On paper, Freedom is substantially larger than A2.
Its principal activity is the manufacture, sale and contract packing of nutritional products, serving markets for functional foods, special nutrition and dietary supplements.
Freedom Foods is involved in the special dietary market in Australia and New Zealand, including consumer products that are dairy-, gluten- and wheat-free.
It has a specialty seafood brand, selling canned sardines and salmon.
Thorpedo Foods is a specialist foods joint venture in association with Olympic swimming champion Ian Thorpe and Yakult Honsha, of Japan.
Yesterday, A2 shares were trading at 8c and Freedom shares at 32c.
Craigs Investment Partners broker Chris Timms said it was hard to determine how the merger proposal would affect A2 shareholders.
Freedom had other divisions, as well as the A2 agreement.
Its shares did not often trade.
However, it seems likely A2 would disappear off the NZX, with Freedom using the A2 Australian listing to list the merged company, he said.
The companies said that during the next three weeks, they would undertake reciprocal due diligence and attempt to negotiate the terms of the merger proposal.
