Federal Treasurer Josh Frydenberg has given conditional approval to China Mengniu Dairy Company's proposed acquisition of Bellamy's Australia. His decision followed the Foreign Investment Review Board's unanimous recommendation the sale could go ahead.
Frydenberg has imposed enforceable conditions on Mengniu's acquisition to ensure the sale is not contrary to the national interest, a statement from the minister said today.
The conditions require:
- a majority of the Bellamy’s Board of Directors to be Australian resident citizens;
- maintenance of the Bellamy’s headquarters in Australia for at least ten years; and
- an investment of at least $12 million in establishing or improving infant milk formula processing facilities in Victoria.
These conditions are enforceable under the Foreign Acquisitions and Takeovers Act 1975 and penalties apply to foreign investors that do not comply with their obligations.
In August, Bellamy’s announced its full-year profit had almost halved. The next month it announced the Scheme Implementation Deed which would see Mengniu acquire 100 per cent of Bellamy's issued shares. Following the announcement of the proposed sale, Frydenberg refused to be drawn on the deal, while Greens Senator Peter Whish-Wilson urged the minister to refer the matter to FIRB (Food & Drink Business 28/08/2019, 16/09/2019, 18/09/2019).
Frydenberg said the conditions ensure Bellamy’s presence in Australia will be maintained, and that Bellamy’s proceeds with previously announced investment in infant milk formula processing facilities.
The decision would 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, he said.
In a statement to the ASX today, Bellamy's said the sale still remains subject to a number of other conditions, including:
- approval of Bellamy's shareholders at the Scheme Meeting;
- court approval; and
- the satisfaction or waiver (where capable of waiver) of certain other customary conditions as outlined in the Scheme Implementation Deed released to the ASX on 16 September 2019.
The Bellamy's Board continues to unanimously recommend that Bellamy's shareholders vote in favour of the Scheme at the upcoming Scheme Meeting to be held at 10.00am (AEDT) on Thursday 5 December 2019.
Each Bellamy's director intends to vote all the Bellamy's shares held or controlled by them in favour of the scheme, in the absence of a superior proposal and subject to the independent expert continuing to conclude that the scheme is in the best interests of Bellamy's shareholders.
