Wattle Health Australia shares have soared after the infant formula supplier acquired a stake in Australian infant formula maker Blend & Pack, helping to secure its business in China.
Shares in Wattle Health gained 10.5 cents, or 22.1 per cent, to 58 cents, almost triple their original price of 20 cents when the company listed in March.
Wattle Health has paid $5 million for a five per cent stake in Blend & Pack, one of eight infant formula manufacturing plants in Australia licensed by Chinese authorities to produce infant formula for China's market.
The company will nominate the Wattle Health Infant Formula for accreditation with the China Food and Drug Authority under new regulatory requirements coming into force from January 2018.
That would allow Wattle to continue to supply China with its infant formula through offline and online channels.
Wattle Health already holds accreditation for its infant formula range, allowing it to sell its products in bricks-and-mortar retail stores in China and through online markets.
But under the new rules, currently licensed infant formula manufacturing plants can only nominate up to three brands to obtain the necessary accreditation.
"This deal places Wattle Health Australia in a strong position to continue to execute on its business plan as outlined in our IPO prospectus and take advantage of the opportunities the acquisition of B&P brings," Wattle Health executive chairman Lazarus Karasavvidis said in a statement on Wednesday.
"It will allow us to service customers as they join the WHA family, and continue to serve the ever-growing Chinese nutritional dairy product market."
Wattle Health also said that Hong Kong-listed Mason Financial Holdings will take a 75 per cent stake in Blend & Pack.
Mason, through Brilliant River, is a major shareholder in Wattle Health, with a stake of about 9.5 per cent.