Breaking News
Investing Pro 0
Cyber Monday Extended SALE: Up to 60% OFF InvestingPro+ CLAIM OFFER

Australia approves China-government backed buyout of dairy firm Bellamy's

Stock Markets Nov 15, 2019 02:45
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
 
APA
+1.07%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
2319
+1.58%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
BAL
0.00%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Nikhil Nainan and Byron Kaye

(Reuters) - Australia cleared a dairy producer part-owned by the Chinese government to buy local infant formula maker Bellamy's Australia Ltd (AX:BAL) for A$1.43 billion (£766.08 million), but imposed several conditions amid a potential backlash.

The government said on Friday the Foreign Investment Review Board (FIRB) had unanimously decided that the sale of Bellamy's to Hong Kong-listed China Mengniu Dairy Co (HK:2319) was not against Australia's interests. Mengniu is 24% owned by Chinese government entity COFCO Dairy Investments.

However, FIRB's approval was conditional on the much smaller Bellamy's keeping both its headquarters and most of its board local, along with guaranteed investment in domestic facilities.

The decision shows the Australian government welcoming Chinese money into a politically sensitive industry at a time when relations between the countries have been strained by accusations of political interference by Beijing.

Australia has been under additional pressure due to a U.S.-China trade war because it has strong ties to both countries.

"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."

Shares of Bellamy's had halved in the year and a half before it announced the Mengniu buyout in September due to delays getting approval to ship product to the Chinese mainland, its biggest market. That prompted some to question whether the Chinese government had intentionally pressured the company to make it a cheaper takeover prospect.

Bellamy's deputy chairman John Murphy was quoted in The Australian newspaper saying there was was "no conspiracy" surrounding the takeover. A representative of Mengniu in Australia was not immediately available for comment.

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.

The company's share rose 2% by midsession on Friday to A$13.20, their highest level since July and just below the total Mengniu offer price of A$13.25.

"HOW AND WHY?"

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.

Opposition Labor Party treasury spokesman Jim Chalmers said the government needed to explain "how and why this decision is in the national interest."

"We are not privy to FIRB advice and haven't been briefed on the decision," he said in an emailed statement. "We need to know more about the undertakings that have been given and that they’ll be followed through."

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 (AX:APA). It also banned China's Huawei from supplying equipment for a 5G mobile network in the country.

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."

Australia approves China-government backed buyout of dairy firm Bellamy's
 

Related Articles

Cold weather could cause French power cuts next week
Cold weather could cause French power cuts next week By Reuters - Dec 01, 2022

PARIS (Reuters) - Cold weather could lead to power cuts in France on Monday as delays to the restart of nuclear power following repair work leave supply lagging demand, analysts...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email