“When you get the endorsement of the president and vice president,it’s a compelling story to put to your business partners here in the US,” Hockey tellsThe Sydney Morning Herald andThe Age.
The deal,which Hockey’s Bondi Partners helped broker,comes amid an infant formula crisis in the US. In response to the shortages,authorities established a fast-tracked process permitting international manufacturers to temporarily supply product into the tightly held market. Bubs Australia was the first to submit its application.
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Now analysts believe the US could emerge as a lucrative export market for Australian infant formula producers,including Bubs and its bigger rival A2 Milk,which for years have targeted China. Three players - Reckitt,Abbott Laboratories,and Nestlé - currently control 90 per cent of the US formula market,estimated to be worth around $US3 billion ($4 billion) annually.
Wilsons Advisory estimates the deal could generate roughly $20 million in sales for Bubs.
Citi analyst Sam Teeger said it was “somewhat perplexing” that Bubs pipped its much larger rival A2 Milk on the deal,given the latter’s revenue base is 30 times that of Bubs,which has a market cap is $376 million compared to dual-listed A2 Milk’s $3.2 billion.