CHINA – Mengniu Dairy one of China’s largest dairy companies has offered to acquire Australia’s leading organic infant formula producer, Bellamy’s for approximately AUS1.5 billion ($1 billion).

Bellamy’s said its board has unanimously recommended shareholders vote to accept the all-cash bid. The deal is also still subject to approval from Australian regulators.

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.

Currently, Bellamy’s does not have a licence to operate within the Chinese market from China’s State Administration of Markets/Regulations (SAMR) and is pursuing entry into the market.

The offer from Mengniu would not change the likelihood of Bellamy’s receiving Chinese approval.

Mengniu stated that it will seek to increase the company’s sales in Australia and throughout the Asia Pacific region, if the transaction is approved.

The deal will help Mengniu extend its portfolio into premium products boosted by its presence in the sector through the controlling stake it holds in lower-end maker, Yashili International Holdings Ltd.

Jeffrey Minfang Lu, CEO of Mengniu said: “Bellamy’s is a leading Australian brand with a proud Tasmanian heritage and track record of supplying high-quality organic products to Australian mums and dads.

“This leading organic brand position and Bellamy’s local operation and supply-chain are critical to Mengniu.

“Our sales growth ambitions for Bellamy’s in Australia, and the broader Asia-Pacific region, will see investment in the local dairy industry.

Bellamy’s CEO, Andrew Cohen, added: “Mengniu is a pre-eminent dairy company in China and an ideal partner for our business. It offers a strong platform for distribution and success in China, and a foundation for growth in the organic dairy and food industry in Australia.

“This transaction can further deliver on our founder’s original vision of a truly iconic Australian brand and ‘A Pure Start to Life’ for the world.

“Our employees, our trade partners and local organic manufacturers will continue to grow and thrive with the success of our business.”

Mengniu has been eyeing overseas acquisitions as China’s appetite for milk and infant formula grows with its middle class.