A2 Milk Company will pay Synlait Milk NZ$24.75 million as part of an agreement to conditionally resolve their disputes – including those related to exclusivity and pricing concerns.
The settlement is conditional on Synlait completing its equity raise and the refinancing of its existing banking facilities.
“A2MC’s decision to support Synlait’s recapitalisation plan reflects the strategic importance to A2MC of the continued stability of production at Synlait’s Dunsandel manufacturing site,” said A2 Milk.
The settlement includes accepting A2 Milk’s cancellation of Synlait’s exclusive manufacturing and supply rights for stages 1 to 3 of the former’s infant milk formula products.
The exclusivity agreement for these products sold in China, Australia, and New Zealand will cease on January 1 next year.
However, A2 Milk’s China-label products are expected to continue to be manufactured at Synlait’s Dunsandel facility unless A2 Milk can secure its own registration from China’s State Administration for Market Administration (SAMR) to manufacture the products there.
A2 Milk said that it owns the intellectual property rights for the product specifications and is free from any restrictions or obligations to source any products from any person including Synlait, third-party suppliers, or internally.
Meanwhile, certain Synlait-manufactured products will be subject to price rises, and the company is expected to benefit from improved purchase order deposit payment terms.
Moving forward, Synlait will provide A2 Milk with an additional SAMR slot at Dunsandel for a potential new China label. The two companies will collaborate on developing the product and seeking SAMR registration by December 2029.
