The a2 Milk Company (ASX: A2M) completes a significant strategic pivot as it finalises the divestment of its entire stake in Mataura Valley Milk Limited to Open Country Dairy Limited. The a2 Milk Company Mataura Valley Milk sale transaction, which closed on 31 October 2025, signifies a decisive chapter in the dairy firm’s comprehensive supply chain realignment mission.
Figure 1: Aerial view of a2 Milk’s production facility in New Zealand.
a2 Milk Divests Mataura Valley Milk in Major Strategic Shift
The a2 Milk Company announced the completion of the Mataura Valley Milk stake sale, divesting its 75% stake, as well as the 25% stake retained by China Animal Husbandry Group (CAHG). In summary, an offering of all Mataura Valley Milk equity to Open Country Dairy Limited. The a2 Milk Company Mataura Valley Milk sale marks a major reset of the Company’s production facilities, culminating in about four years of industrial ownership.
David Bortolussi authorised the announcement confirming the 31 October 2025 completion date. Details of the sale were made public on the publication of the Company’s 2025 annual results in August 2025. In addition, management supplied broader supply chain disclosure as part of the rediscovery of manufacturing sequencing.
Why a2 Milk Chose to Exit Mataura Valley Milk
The rationale for the a2 Milk Company’s decision to sell Mataura Valley Milk is contained in its inability to tackle the existing operational challenges and align the plant process with the adopted strategy. Mataura Valley Milk, despite being an advanced nutritional powder drying facility continuously struggled to achieve profitability under a2 Milk’s ownership.
The financial data for this subsidiary reveals that its EBITDA was NZD 26.5 million in FY23, compared to NZD 18.8 million during FY22. Finally, although FY25 was more successful in terms of the sales volume achieved, the Company continued to be a drag on group margins and affected the need for capital investment.
Figure 3: David Bortolussi, Managing Director and CEO of The a2 Milk Company.
Bortolussi was candid about the decision. “MVM is an advanced nutritional powder drying facility that continues to have significant potential but is no longer the optimal asset and pathway to achieve our strategic objectives,” he stated during the August results announcement.
Supply Chain Transformation: The Bigger Picture
The a2 Milk divests Mataura Valley Milk decision cannot be viewed in isolation. It forms one half of a transformative dual transaction that fundamentally reshapes the Company’s manufacturing strategy.
At the same time as the Mataura sale announcement in August 2025, a2 revealed its acquisition of Yashili New Zealand Dairy’s Pokeno factory for NZD 282 million. The plant is 30,000 square meters in size and holds two essential China-label infant formula registrations, which are essential for the manufacturer to access the highly observed NZD 23 billion infant formula market in China.
Equally critical, the Company has effectively entered a new supply agreement securing it of continued A1 protein-free milk ingredients deliveries from Mataura Valley Milk following the sale. This ensures continued access to specialised ingredients without the ownership’s capital and operational challenges.
Financial Implications and Shareholder Returns
The twin transactions deliver a2 Milk a net proceeds of about NZD 100 million before any further costs on a cash and debt-free basis. The NZD 130 million book loss from Mataura disposal will equally be fully accounted for under discontinued operations. However, the management reckons that this would be just a modest cost for radical strategic repositioning.
Given the Company’s strong balance sheet, with closing net cash of NZD 1.06 billion as at 30 June 2025, CGC has ample capacity to absorb the loss. The FY26 guidance supports continued growth, with revenue growth expected in the high-single-digit percentage range and EBITDA margin improvement to approximately 15-16% from 14.4% in FY25. This margin growth includes the removal of Mataura losses and improved manufacturing economics through the Pokeno facility.
Figure 4: The a2 Milk Company (ASX: A2M) current share price overview
What This Means for Investors
The sale completion of the a2 Milk Company’s Mataura Valley Milk removes a persistent drag on profitability. Combined with the Pōkeno acquisition’s promise, the Company could well be on a trajectory to achieve its NZD 2 billion targeted medium-term revenue.
For Open Country Dairy, the purchase offers more manufacturing capacity and geographies served within New Zealand. The processor is committed to funding acquisitions during sluggish dairy pricing, highlighting the belief in industry fundamentals.
Figure 5: Steady revenue growth with EBITDA margins progressing towards medium-term targets.
FAQs
Q1: When was the Mataura Valley Milk sale completed?
The a2 Milk divests Mataura Valley Milk transaction was completed on 31 October 2025, with both the Company’s 75% stake and China Animal Husbandry Group’s 25% stake transferred to Open Country Dairy Limited.
Q2: How much did a2 Milk receive from the sale?
The Company received approximately NZD 100 million in net proceeds from the Mataura Valley Milk stake sale on a cash and debt-free basis.
Q3: Will a2 Milk continue sourcing ingredients from Mataura Valley Milk?
Yes, a2 Milk has secured a supply agreement ensuring continued access to A1 protein-free milk ingredients from Mataura Valley Milk under its new ownership.
Q4: What loss did a2 Milk book on the transaction?
The Company expects to recognise a loss of approximately NZD 130 million on the Mataura Valley Milk stake sale, which will be treated as discontinued operations.
