China’s $1.5b takeover of Aussie company
THE Foreign Investment Review Board (FIRB) has approved the $1.5 billion takeover of Bellamy's by China Mengniu Dairy Company.
Treasurer Josh Frydenberg has backed the FIRB's view that the acquisition is not contrary to Australia's national interest, but imposed conditions including that majority of the Bellamy's board of directors will have to be Australian resident citizens.
The takeover was approved on condition the infant formula maker remains headquartered in Australia for 10 years and is run by a majority Australian board.
The government regulator also requires the Chinese buyer to invest at least $12 million in infant milk formula processing facilities in Victoria.
Shares in Bellamy's, which is number four by market share in the Australian infant formula market, surged by more than 50 per cent on one day in September when China Mengniu Dairy Company's $13.25 cash-per-share bid was announced.
In a statement Treasurer Josh Frydenberg said he had provided conditional foreign investment approval for the proposed takeover after FIRB did extensive consultation on a wide range of issues.
"Consistent with the unanimous recommendation of the FIRB, the Treasurer has concluded the acquisition is not contrary to the national interest," the statement said.
"This approval will ensure Bellamy's can continue to support jobs in Australia and strengthen its ability to expand its domestic market as well as its export opportunities, particularly into the growing Asian market.
"The decision will also provide opportunities for the suppliers that contribute to Bellamy's products, including Australian dairy farmers.
The Treasurer said he had imposed enforceable conditions on China Mengniu's acquisition of Bellamy's to ensure that this acquisition is not contrary to the national interest.
"These conditions will ensure that Bellamy's maintains its presence in Australia, and that Bellamy's proceeds with previously announced investment in infant milk formula processing facilities," he said.
"The Morrison Government welcomes foreign investment where it is consistent with our national interest. Without foreign capital and investment, Australia's output, employment and standard of living would be lower.
"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."
The board of the Tasmania-based company unanimously recommended shareholders vote in favour of the proposal, but 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.
- With AAP