Mengniu Dairy moves to buy Australia baby milk formula maker Bellamy’s for US$1 billion as part of global expansion goals
- Deal accepted by Bellamy’s but must be approved by Australian board
- Takeover would strengthen Mengniu both in home and foreign markets
China Mengniu Dairy has offered A$1.5 billion (US$1 billion) to take over Australian infant milk formula maker Bellamy’s Australia, reflecting the dairy products giant’s goal to expand aggressively abroad.
The Inner Mongolia company said on Monday that it would buy Bellamy’s at A$13.25 a share, which represents a 59 per cent premium to the Australian company’s closing price of A$8.32 on Friday.
The deal, accepted by the board of Bellamy’s, is subject to a review by Australia’s Foreign Investment Review Board, Mengniu said in a filing to the Hong Kong stock exchange.
“Infant milk formula is one of the largest and fastest-growing segments among all dairy segments in China driven by increasing disposable income and growing child spending,” Mengniu said in a statement. “Future growth is underpinned by continuous premiumisation and increasing penetration into lower-tier cities which have larger households and higher birth rates.”
The products of Bellamy's have been well received by mainland Chinese consumers via cross-border e-commerce platforms, as young parents are willing to spend more on imported infant milk powder after the melamine contamination scandal in 2008. Four children died and more than 10,000 were hospitalised after being fed Sanlu Group milk formula.
In 2018, mainland China imported milk powder worth US$2.43 billion, an increase of 12 per cent on year, according to the General Administration of Customs. The imports represented about 8 per cent of China’s total milk powder sales. At 22.2 billion yuan (US$3.1 billion) last year, their sales were 18.6 per cent higher than 2017.
