By David Winning
SYDNEY–A2 Milk said it intends to cancel Synlait Milk’s exclusive manufacturing and supply rights for some infant milk formula products, citing Synlait’s failure to meet key targets during the 2023 fiscal year.
A2 Milk said it advised Synlait of its decision in writing after the market closed on Friday. Synlait has been the exclusive supplier of several of a2 Milk’s products, including its a2 Platinum brand, sold in China, Australia and New Zealand.
Synlait’s shares in New Zealand were placed in a trading halt early on Monday as the company considers the implications of a2 Milk’s decision.
“A2 Milk Company has given notice of cancellation of Synlait’s exclusive manufacturing and supply rights due to Synlait’s delivery in full and on time performance (DIFOT) during FY 2023 falling below the level required for Synlait to maintain such exclusive rights,” a2 Milk said in a regulatory filing.
A2 Milk said Synlait would continue to be an important supplier after its exclusive rights were removed. Pricing and other key terms would continue to apply, it said.
Synlait could dispute the notice of rights cancellation, which would trigger negotiations between the companies and potentially arbitration proceedings.
Write to David Winning at [email protected]
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