The Foreign Investment Review Board has approved the $1.5 billion takeover of Bellamy’s by China Mengniu Dairy Company, although the infant formula maker will have to remain headquartered in Australia for a decade and be run by a majority Australian board.
Treasurer Josh Frydenberg has backed the FIRB’s view that the acquisition is not contrary to Australia’s national interest. Subject, however, to conditions including that the majority of Bellamy’s board of directors be Australian resident citizens.
The Treasurer also requires the Chinese buyer to invest at least $12 million in infant milk-formula processing facilities in Victoria.
“The conditional approval demonstrates our foreign investment rules can facilitate such an acquisition while giving assurance to the community that decisions are being made in a way which ensures that Australia’s national interest is protected,” Frydenberg said in a statement on Friday.
Shares in Bellamy’s, which is No. 4 by market share in the Australian infant formula market, surged by more than 50 percent on the day in September when China Mengniu Dairy Company’s $13.25 cash-per-share bid was announced.
The board of the Tasmania-based company unanimously recommended that shareholders vote in favor of the proposal. The board denied it had anything to do with fast-tracking Chinese regulation to allow expansion in the country.
After a lengthy wait, Bellamy’s is still waiting on backing from China’s State Administration for Market Regulations to sell organic formula in stores.
By Stuart Condie