Corporate: Jatenergy’s acquisitions mean it now controls its infant formula supply chain
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Jatenergy (ASX: JAT) have announced acquisition of a private Victorian milk powder company meaning it now has control of its supply chain.
It will pay $14 million – $12 million in cash and $2 million in shares – and own 70 per cent of the company. It will be funded by a combination of existing cash reserves, debt funding and options conversion.
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Since listing in 2008 Jatenergy has been in everything from energy (hence its legacy name) to health care. While it has settled with infant formula aspirations for a few years it has until now outsourced manufacturing.
The company declared this morning this has resulted in lost or deferred sales but this will no longer be the case. In acquiring the company Jatenergy will own a 5,000 square metre manufacturing facility in Melbourne.
The company – Australian Natural Milk Association (ANMA) – is one of only 15 approved infant formula exporters.
Jatenergy managing director Wilton Yao said it will mean no more reliance on outsourcing, as it now has approved access to China.
“Through this acquisition, we are excited to secure infant formula slots for exporting infant formula and other dairy products to China and look forward to delivering enhanced returns to investors by lowering costs and manufacturing more rapidly to meet growing demand,” he said.
Jatenergy shares jumped by as much as 30 per cent at market open but have settled at 16 per cent higher at 11am.
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