Media Updates, page-1225

BP suggested A2M should TO SM1:
The recent material outperformance of A2M relatively to SM1 now sees the A2M premiumat a point where EPS accretion would be material for A2M if it were to make a move onSM1. We see the potential motivation for such a move as being to internalise the entiresupply chain to gain control of its own milk pool (and its SAMR registration), to combatagainst inflation in its input costs due to rising ingredient prices (as SMP comes off a fiveyear low) and to acquire a capability in infant and adult nutrition it does not have internally.In the analysis below we estimate EPS accretion of ~18% for A2M in a scrip based bid,assuming only modest savings (~$5m compared to administration expenses of ~$18.6m inFY18).
sm1.pdf