Gensco and Care A2 partnered in November amid a shortage of baby formula in the US, where the Australian company gained special access to a previously restricted market. The Biden administration allowed access for more overseas producers after a contamination issue at a major manufacturer created shortages last year.
However, the relationship quickly soured. In August, Gensco accused Care A2 of misleading or deceptive conduct, and breach of contract. Care A2 denies the allegations. Last week, the Australian company escalated the dispute, alleging Gensco breached their agreement, and failed to act in good faith. Gensco said Care A2’s allegations “are without foundation”.
Care A2, in a countersuit launched last week, says it has suffered estimated loss revenue of $1.2 billion and future profit of $358 million over the failed partnership with Gensco. It alleges that Gensco “at no time” made any substantive approaches to retailers about selling its formula to retail clients. Gensco allegedly misled the company about its ability to buy up to one million tins of formula for the US.
As part of its counterclaim, Care A2 said it had worked with Dr Young, who has researched baby nutrition for more than a decade.
But a University of Rochester Medical Centre spokesman said, “Any use of Dr Young’s name or likeness to imply endorsement of a Care A2 product was done without her knowledge or consent, and there is no legitimate reason for her to be named in litigation involving the company”.
In response, Care A2’s lawyer said the company had engaged with Dr Young as part of its “research into the development of Care A2+ Infant Formula for the US, including a recorded interview”.
“When asked to work with Care as a consultant, Dr Young declined to do so as it would not be permitted under the terms of her employment at Rochester University,” Care stated via its lawyers. “Care remains appreciative of the input and support provided by Dr Young.”
The lawyer confirmed Care has lodged an in-principle application for listing with the ASX. The group has promised an ASX listing for several years, aiming for a traditional IPO which was shelved last year. Care is now pursuing a compliance listing where no fresh capital is being raised.
Care A2 has repeatedly told investors about its listing prospects. In October, its parent entity, Care Corporation, suggested it would be valued at as much as $544 million in a listing that would have been conducted by Morgans.
In May, it told investors it was making “steady progress” toward a compliance listing and aimed to debut on the ASX in June or July.
In a statement, Gensco said it was “committed to establishing in evidence that Care made serious misrepresentations both to Gensco and to the FDA, including about its ability to manufacture and supply products for Gensco to distribute using its existing relationships with major retailers in the US”.
“Care was not able to manufacture the quantities that it committed to, and the product that was supplied was defective and not able to be imported into the US,” the company told The Australian Financial Review.
“Gensco is particularly disappointed that Care seems to have expended more energy and resources pursuing legal proceedings than getting infant formula into the hands of American families who were desperately in need.”
