Bellamy’s (ASX: BAL) has received regulatory approval for the takeover, with some caveats.

Bellamy’s is an ASX-listed organic infant formula and organic food company that was founded in 2004 in Launceston, Tasmania. It was the first company to offer an organic infant milk formula range to Australian mothers. It is now becoming a growing presence in the large Chinese market.

Bellamy’s Receives FIRB Approval

The company has received approval from Australia’s Treasurer Josh Frydenberg for the takeover by China Mengnui Dairy Company (SEHK: 2319), one of China’s leading dairy product manufacturers.

As a reminder, the offer valued Bellamy’s at a combined $13.25 (dividends plus cash takeover) per share.

The Chinese company is going to buy Bellamy’s at an enterprise valuation of 30 times the reported normalised FY19 EBITDA (click here to learn what EBITDA means), putting Bellamy’s at a total valuation of $1.5 billion.

The takeover has been approved, but with caveats according to the Australian Financial Review. Some of the caveats include that a majority of its directors must be Australia resident citizens, that the company HQ remain in Australia for at least 10 more years and that it spends at least $12 million to establish or improve milk processing facilities in Victoria.

In a statement the Treasurer Josh Frydenberg said, “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.

These conditions will ensure that Bellamy’s maintains its presence in Australia, and that Bellamy’s proceeds with previously announced investment in infant milk formula processing facilities.

“Without foreign capital and investment, Australia’s output, employment and standard of living would be lower.”

It was reported by the AFR that it was easier to approve this deal because it didn’t involve any critical infrastructure.

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At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.