a2 Milk shares surge after a new infant formula deal with Synlait

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Shares in a2 Milk Company surged after announcing an extension and increase to its supply deal with Synlait, the New Zealand-based infant formula company.

A short time ago, they were up 4.7% to $10.86. a2 Milk was the ASX’s best performing stock in 2017-18 with an annual gain of 179.79%.

Synlait Milk was up 1.7% to $10.580.

The a2 Milk Company announced a two-year extension to the a2 Platinum infant formula supply agreement, effectively creating a new minimum term of five years to July 2023.

The deal also increases the volume of infant formula products as demand for a2 Platinum infant formula continues to grow in China and in Asia.

“The success of the a2 Platinum product has exceeded all expectations over the past two years,” says Synlait CEO John Penno.

“This step is about bringing Synlait and the a2 Milk Company closer together in anticipation of continued growth.”

a2 Milk company in February posted a 150% jump in profit to $98.5 million for the first half.

a2 Milk also announced earlier this year a new strategic relationship with New Zealand’s Fonterra Co-operative Group Limited to ensure future supplies of milk.

The deal links Fonterra’s global milk pool and supply chain, manufacturing capability and in-market sales and distribution capacity with a2’s brand strength and capabilities.

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