November 20, 2019
Mengniu Dairy China purchases Australian dairy firm Bellamy's with stipulated conditions
The S$1.43 billion (US$90.27 million) purchase by Mengniu, partly owned by the China government, was approved by the Australian government with several conditions in place, reported Reuters.
Australia's Foreign Investment Review Board (FIRB) found the sale not to be against Australia's interests. China government entity COFCO Dairy Investments owns 24% of Hong Kong-listed Mengniu.
Part of the conditions stipulated by the FIRB include retaining Bellamy's headquarters in Australia for 10 years, maintaining a Australian majority board, as well as guaranteed investment of A$12 million by the new owners to Australian processing facilities.
The decision comes at a time when Australia-China relations have strained following Australia's accusations to China of political interference, and under heavy pressure from the current US-China trade war.
According to a statement from Josh Frydenberg, treasurer, the purchase of Bellamy's will mean the company continues to support Australian employment and boost its ability to expand its domestic and export markets, especially in Asia.
The statement also said the approval will give more opportunities to local dairy farmers that supply Bellamy's products.
Before the Mengniu purchase, Bellamy's shares dropped by half as the company struggled to get export approval to China, its biggest market.
Bellamy's is currently the fourth biggest Australian infant milk formula company by market share.
Its share price went up 2% to A$13.20, its highest from July. Mengniu will buy out Bellamy's at A$13.25 per share.