A2 Milk share price climbs amid legal stoush

The A2 Milk Company Ltd (ASX: A2M) share price is up almost 2% in late afternoon trading on Wednesday.

Shares of the baby formula giant are currently at their intraday high of $5.30 a share, a 1.92% gain on yesterday’s closing price.

The company’s shares are defying a minor sell-off in the consumer staples sector on Wednesday, with the S&P/ASX 200 Consumer Staples Index (ASX: XSJ) currently down 0.73%.

Meanwhile, the broader market is almost flat, with the S&P/ASX 200 Index (ASX: XJO) up only 0.16%.

The gain comes amid news that A2 Milk is challenging one of its rivals over an intellectual property dispute, as reported by The Australian. And judging by its share price movement, investors seem to believe it will come out on top.

Let’s investigate the details of the lawsuit.

A2 Milk sues Care A2

A2 Milk has filed a claim in the Federal Court against its rival Care A2, seeking a “permanent injunction restraining the respondents from infringing the A2 Milk registered marks”, according to the report.

The action follows a cease and desist letter to Care A2 as well as Care A2’s countersuit denying any alleged trademark infringement.

The article also said that Care A2 milk’s parent company, Care Corporation, has warned of a fake prospectus circulating. It reportedly contains claims the company seeks to raise $49.5 million to float the company on the ASX and has a valuation of $544.5 million.

Inside the fake prospectus, there are also several unfavourable comparisons between A2 Milk’s products and Care’s. These reportedly include the claim that A2 Milk’s Platinum product “is not produced from grass-fed A2 cows and does not use fresh milk”, the article said.

A2 Milk has historically shown some resilience when it’s found itself in legal trouble. In May, A2 Milk’s shareholders launched a class action against the company for alleged misleading and deceptive conduct.

This could indicate that A2 Milk will maintain its footing despite the legal turmoils ahead.

A2 Milk share price snapshot

The A2 Milk share price is down around 3% year to date. Meanwhile, the S&P/ASX 200 Index is down more than 6% over the same period.

The company’s market capitalisation is around $3.9 billion.

The post A2 Milk share price climbs amid legal stoush appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Here are the 3 most traded ASX 200 shares on Wednesday
• What’s boosting the Lynas share price on Wednesday?
• Why did the IAG share price just hit a new 52-week high?
• Why did the AMP share price just crack another new 52-week high?
• 3 ASX 200 shares hitting new heights today

Motley Fool contributor Matthew Farley has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended A2 Milk. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/M6r8xNy