Australia approves China Mengniu purchase of Bellamy's, with conditions
By Nikhil Nainan (Reuters) - The Australian government approved China Mengniu Dairy Co's A$1.43 billion (£766.08 million) takeover of infant formula maker Bellamy's Australia Ltd on Friday, imposing conditions to keep the company tied to Australia. 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 hard-line stance on Chinese investment into the country
By Nikhil Nainan
(Reuters) - The Australian government approved China Mengniu Dairy Co's <2319.HK> A$1.43 billion (£766.08 million) takeover of infant formula maker Bellamy's Australia Ltd
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 hard-line 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 favour of the deal at a meeting next month.
Bellamy's has spent years awaiting approval to sell product in its target market, China. The approval offers Bellamy's shareholders a way to cash out, while giving Mengniu a prized consumer brand.
Bellamy's shares rose 2.1% in the first 10 minutes of trade on Friday to A$13.22, sitting at their highest level since July. They are still just below the total China Mengniu Dairy Co offer price of A$13.25, which they have not exceeded since the takeover approach in September.
FOREIGN INVESTMENT CURBS
Australia has blocked a number of Chinese investments in recent years, including an attempt by Hong Kong-based infrastructure investor CK Group to buy energy pipeline operator APA Group
Frydenberg said the government would continue to welcome 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 approval comes as economists have downgraded forecasts for Australian economic growth in 2019, despite three central bank rate cuts since June, with no return to long-term average growth expected until at least 2021.
(Reporting by Nikhil Kurian Nainan, additional reporting by Shreya Mariam Job; Editing by Byron Kaye, Grant McCool and Jane Wardell)
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