Australian authorities have conditionally approved the proposed acquisition of infant formula producer Bellamy’s Australia by China Mengniu Dairy.
The AUD 1.5 billion ($1.02 billion) deal, which was announced in September, has been recommended unanimously by Australia’s Foreign Investment Review Board.
Australia’s Treasurer Josh Frydenberg has backed the approval but insisted that certain conditions be imposed.
The business will have to be headquartered in Australia for at least ten years and invest at least AUD 12 million ($8.2 million) in improving infant milk formula processing facilities in the state of Victoria.
The majority of the company’s board of directors will also have to be Australian resident citizens.
“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,” said a statement by Frydenberg’s office.
“The decision will also provide opportunities for the suppliers that contribute to Bellamy’s products, including Australian dairy farmers.”
The statement added: “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.”
Bellamy’s, which is number four by market share in the Australian infant milk formula market, said it continued to recommend that shareholders vote in favour of the deal at a meeting in December.
Hong Kong-listed Mengniu has manufacturing facilities in China, New Zealand and Indonesia. The company also distributes its dairy products to Hong Kong, Singapore, Macau and Myanmar through its overseas sales network.
When the deal was announced in September, Bellamy’s CEO Andrew Cohen described Mengniu as “an ideal partner” that offers a “strong platform for distribution and success in China”.
© FoodBev Media Ltd 2020