China export specialist JATENERGY (ASX: JAT) has secured its Australian supply chain by buying 70 per cent of its supplier of infant formula.
The exporter of Australian consumer products had paid $14 million in cash and shares to buy control of Melbourne-based Australian Natural Milk Association.
The purchase comes with infant formula slots allowing imports into China.
Ownership of the remaining 30 per cent of the business will remain with the original owners
JAT managing director Wilton Yao said: “This acquisition accelerates JATs strategic plan to insource manufacture of its fast-growing product range and decrease reliance on contract manufacturers.
“We have taken this opportunity to to vertically integrate to capture the manufacturer’s margin, reduce our business risk and build a strong fixed asset base.”
JAT exports a wide range of products ranging from milk products to vitmains and nutraceuticsls through online and direct selling channels.
Yao said the purchase offered the prospect of higher returns for shareholders as the company was more easily respond to growing demand.
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