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.

Pic: Jatenergy & ANMA

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.


In other ASX small cap corporate news today…

Small business lender Prospa (ASX: PGL) has announced it has established a facility to fund New Zealand small business. The three-year fund will have a capacity of NZ$45 million and will integrate with Australia’s funding platform. Prospa’s New Zealand general manager Adrienne Church said, the facility will “allow us to support an increasing number of local small businesses”.
Nick Scali (ASX: NCK) has announced a net profit after tax of $42 million. This came despite a slowdown in the housing market and as Anthony Scali acknowledged, furniture purchases were highly discretionary. He declared the result “satisfactory” and announced a dividend of 20 cents per share. It has opened six stores during the year, will open four more this year and has a long term target over 80.

Kathmandu (ASX: KMD) has jumped 13 per cent after announcing strong unaudited results up nearly 10 per cent on the year before. It achieved sales of NZ$545 million and a normalised net profit between NZ$55.5 million and NZ$57.0 million. It has also cut its net debt by NZ$12 million. The strong performance left CEO Xavier Simonet “particularly pleased”.
FIFO provider Alliance Aviation (ASX: AQZ) announced its annual result as well. Its profit before tax was up 26 per cent to $32.8 million. It has bought five new aircraft this year and reduced its debt by $5 million. The company has declared the outlook looks positive because of increased demand expected from wet leasing, tourism and the all important FIFO market.