The Australian government on Friday approved China Mengniu Dairy Co. Ltd.’s (02319.HK) A$1.43 billion (US$980.27 million) takeover of infant formula maker Bellamy’s Australia Ltd. but imposed conditions to keep the company tied to Australia, Reuters reports.
The decision that the acquisition was not against Australia’s national interests dispels fears that the Foreign Investment Review Board (FIRB) would stick to a hardline stance on Chinese investment into the country.
The conditions imposed by FIRB include that Bellamy’s headquarters remain in Australia for at least 10 years, that the majority of its board be Australian citizens living the country, and that at least A$12 million is invested in local processing facilities.
“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 from Treasurer Josh Frydenberg’s office.
“The decision will also provide opportunities for the suppliers that contribute to Bellamy’s products, including Australian dairy farmers.”
Bellamy’s, which is number four by market share in the Australian infant milk formula market, acknowledged the approval and said it continued to recommend that shareholders vote in favor of the deal at a meeting next month.
Bellamy’s has spent years awaiting approval to sell products in the Chinese market. The approval offers Bellamy’s shareholders a way to cash out, while giving Mengniu a prized consumer brand.
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