Bellamy's Australia has entered a Scheme Implementation Deed which will see China's Mengniu Dairy Company acquire 100 per cent of Bellamy's issued shares.

Bellamy's Board has unanimously recommended shareholders accept the offer of $13.25 cash per share, $12.65 cash per share from Mengniu and 60 cents per share fully franked special dividend paid by Bellamy's.

The cash amount values Bellamy's equity at approximately $1.5 billion. It represents an enterprise value 30 times reported normalised FY19 EBITDA.

Bellamy’s Board of Directors unanimously recommend that Bellamy’s shareholders vote in favour of the Scheme, in the absence of a superior proposal and subject to an Independent Expert concluding (and continuing to conclude) that the Scheme is in the best interests of Bellamy’s shareholders. Each Director of Bellamy’s intends to vote all the Bellamy’s shares that he or she holds or controls in favour of the Scheme, subject to those same qualifications.

Bellamy’s Chair John Ho said: “The proposed Scheme is an attractive all-cash transaction at a 59 per cent premium to the prevailing share price. It reflects the strength of the Bellamy’s brand, the dedication of 160 passionate employees and the progress of our turnaround plan.”

Bellamy’s CEO Andrew Cohen said: “Mengniu is a preeminent dairy company in China and an ideal partner for our business. It offers a strong platform for distribution and success in China, and a foundation for growth in the organic dairy and food industry in Australia.

“This transaction can further deliver on our founder’s original vision of a truly iconic Australian brand and ‘A Pure Start to Life’ for the world. Our employees, our trade partners and local organic manufacturers will continue to grow and thrive with the success of our business.”

Mengniu’s CEO Jeffrey, Minfang Lu said: “Bellamy’s is a leading Australian brand with a proud Tasmanian heritage and track record of supplying high quality organic products to Australian mums and dads. This leading organic brand position and Bellamy’s local operation and supply-chain are critical to Mengniu.”

China Mengniu Dairy Company operates as a holding company which, through its subsidiaries, manufactures and distributes dairy products in China. It offers products including milk, ice cream, and milk powder.

In a December 2017 interview with McKinsey's, Lu said, "We collect four million tons of milk each year. We sell 12 billion packs of product to our consumer, and we have 58 manufacturing sites, more than 1,000 manufacturing lines, more than 2,000 SKUs."

Rough financial year for Bellamy's with profits halved

Bellamy’s FY19 was a “challenging period” due to regulatory changes, a lower birth rate and increased competition for Chinese demand, the company said yesterday when it announced its results for the 2019 financial year.

The challenges saw Bellamy’s full-year profit almost halve to $21.7 million in FY19, down from $42.8 million in FY18. Net revenue was $266 million and normalised EBITDA was $47 million (17.6 per cent) (Food & Drink Business, 28 August 2019

 CEO Andrew Cohen said the company would defer its medium-term target of $500 million revenue by 2021 due to the ongoing regulations process. The company has been waiting more than a year for State Administration of Markets Regulations (SAMR) registration from Beijing.

Packaging News

Amcor’s first half results for the current financial year prompted the company to improve the outlook for the 2020 financial year. In total, Amcor reported an adjusted EBIT of $699m, up 4.4 per cent in constant currency terms.

Packaging and display business Orora is going through some turbulence, according to the company’s half-year results, with business lagging in North America.

Whoever ends up becoming the new owner of the OI Glass business in Australia & New Zealand, will face tough demand conditions over the next two to three years, writes industry analyst Paul Allen, in this exclusive report for PKN.