Mengniu makes offer to Australian formula maker
China Mengniu Dairy Company has made a 1.5-billion-Australian-dollar (US$983 million) offer to buy Australian infant formula maker Bellamy’s.
Bellamy’s said on Monday its board had accepted the AU$13.25-per-share-cash offer from the Hong Kong-listed dairy company, which represents a 59 percent premium on the company’s closing share price on Friday.
The deal is expected to close at the end of 2019 and still requires approval from Bellamy’s shareholders and Australia’s Foreign Investment Review Board.
Bellamy’s shares jumped as much as 56 percent in early trading in Sydney on Monday to around AU$12.80 each.
Bellamy's said in a statement that its board has unanimously recommended shareholders vote in favor of the deal.
Mengniu said the proposed offer is in line with its local and regional strategy, and will enable it to capture the huge potential of organic infant formula and baby food categories in China and Southeast Asia.
"This leading organic brand position and Bellamy’s local operation and supply chain are critical to Mengniu,” commented Chief Executive Officer Lu Minfang.
"We'll also continue investment in the local dairy industry to ensure the required capacity is in place to achieve our sales growth ambitions for Bellamy’s in Australia, and the broader Asia-Pacific region,” Lu added.
“Mengniu offers a strong platform for distribution and success in China, and a foundation for growth in the organic dairy and food industry in Australia,” Bellamy's Chief Executive Officer Andrew Cohen said in a statement.
"As industry giants such as Mengniu and Yili continue to grow their business size, expansion through mergers and acquisitions will be a reasonable move," commented Song Liang, a senior dairy industry analyst and independent consultant.