Insider trading probe sours A2 Milk bid
An insider trading investigation into A2 Milk Co suitor, US based Dean Foods, is understood to have scuppered its involvement with Australian based Freedom Foods in a potential takeover of the specialty milk marketer.
Dean and Freedom Foods, which is a major supplier to A2, put forward an expression of interest in A2 in June, although the offer amount was undisclosed.
The A2 Milk board in July said it wasn’t compelling enough and talks have since stalled.
Australian sources suggest the transaction is now off the table, with Dean Foods distracted by an insider trading investigation launched by US federal authorities.
The Wall St Journal has reported both criminal and civil authorities are investigating whether the former chairman of Dean Foods, Tom Davis, leaked inside information about a corporate spin off to professional gambler, William T Walters, who in turn, is suspected of tipping off championship golfer, Phil Mickelson.
The food and beverage company has been subpoenaed to provide documents after reports the investigation centres on the company’s spin off of a WhiteWave Foods subsidiary in August 2012.
Davis, who had been a Dean Foods board member since 2001, resigned earlier in August.
The company said there had been no further contact between the parties since it rejected the offer, and a spokesman said on Friday it had no knowledge of whether Dean Foods had pulled out of the talks.
A spokeswoman for Freedom, which has a near 20 per cent blocking stake in A2 Milk, declined to comment on the potential takeover.
It is understood Freedom, which is controlled by the Perich family, doesn’t want to finance such a move on its own.