AUSTRALIA – The Australian government has conditionally approved the A$1.43 billion (US$980.27 million) takeover of organic infant formula producer, Bellamy’s by its Chinese peer, Mengniu Dairy.

Among the conditions imposed to keep the company tied to Australia include that Bellamy’s headquarters remain in Australia for at least 10 years while majority of its board be Australian citizens living in the country.

In addition, the Foreign Investment Review Board (FIRB) also requires Mengniu Dairy to make investments of at least A$12 million (US$8.18m) 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.

“The decision will also provide opportunities for the suppliers that contribute to Bellamy’s products, including Australian dairy farmers,” said a statement from Treasurer Josh Frydenberg’s office.

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.

The deal will see Mengnui add to its portfolio one of the premium brand in the fast growing infant formula market, in a country which ranks as the world’s largest importer of infant formula products.

With the acquisition, Mengniu will also be well positioned to expand its portfolio into premium products supported by its presence in the sector through the controlling stake it holds in lower-end maker, Yashili International Holdings Ltd.

Commenting on the transaction when the deal was announced in September this year, Jeffrey Minfang Lu, CEO of Mengniu stated that the company will seek to increase the its sales in Australia and throughout the Asia Pacific region, if the transaction is approved.

On the other hand, Bellamy’s, which does not have a license to operate within the Chinese market from China’s State Administration of Markets/Regulations (SAMR), is also pursuing entry into the market.

Mengniu, which is 24 per cent owned by Chinese government entity Cofco Dairy Investments, is eyeing overseas acquisitions to complement growth in Chinese milk and infant formula market.