SYDNEY, Nov 15, 2019, SMH. The $1.5 billion sale of Tasmania-based infant formula company Bellamy’s Organic to China Mengniu Dairy Company is now a near certainty, after Treasurer Josh Frydenberg gave conditional approval to the deal, The Sydney Morning Herald reported.
In a statement released on Friday, Mr Frydenberg said the Foreign Investment Review Board’s (FIRB) “unanimous” recommendation for the deal to be approved came after extensive consultations on a wide range of matters.
Mr Frydenberg has imposed a range of conditions on the deal, which he said were to ensure that the acquisition was “not contrary to the national interest.”
The conditions include that Bellamy’s keep its headquarters in Australia for at least 10 years, that the majority of its board be Australian resident citizens, and that at least $12 million be invested in improving, or establishing, infant milk formula processing facilitates in Victoria.
“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,” he said.
“The Morrison Government welcomes 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 bid by China Mengniu Dairy Company for Bellamy’s has been unanimously backed by Bellamy’s board, but has generated controversy among some politicians concerned about it.
The Chinese government-owned entity Cofco owns about 16.2 per cent of Mengniu, so the deal has put the spotlight on both the FIRB and the Morrison government’s attitude to foreign investment in Australia at a time when relations between China and Australia have been strained.
The high profile Tasmanian independent MP Andrew Wilkie was quick to voice concerns about the proposed sale when it was announced in September, saying that many Australians would “be uneasy with this sale for all sorts of reasons and it’s important that the FIRB be seen to act quickly and competently and be prepared to stop it if need be”.
On Friday morning, Shadow treasurer Jim Chalmers said the government needed to explain the decision, particularly around the conditions being imposed on the company.
“It is up to the Treasurer to explain how and why this decision is in the national interest,” he told The Sydney Morning Herald and The Age.
“We are not privy to FIRB advice and haven’t been briefed on the decision.
“We need to know more about the undertakings that have been given and that they’ll be followed through.”
In a statement to the ASX, Bellamy’s confirmed that Mengniu had received written advice from the FIRB that the Commonwealth did not object to the deal.
“The implementation of the scheme (of arrangement) remains subject to a number of 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,” Bellamy’s said.
In an interview with The Age and Sydney Morning Herald shortly after the deal was announced, Bellamy’s boss Andrew Cohen said it was “in the national interest, because look, effectively they’re going to keep it as an Australian-run business. If anything, our operations here would grow and our employees would grow”.
Bellamy’s, which describes itself as Australia’s number one organic infant formula business, generates significant sales in China but has been hamstrung in recent times because it does not have the required approval for its organic infant formulas to be sold in Chinese retail outlets. It applied for this regulatory tick at the end of 2017.
Mr Cohen has in the past said that Bellamy’s was “a brand that’s loved in China”.