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China Mengniu to acquire Australian infant formula maker Bellamy's for A$1.46B

China Mengniu Dairy Co. Ltd. plans to acquire infant formula and baby food maker Bellamy's Australia Ltd. for approximately A$1.46 billion, according to separate regulatory filings from both companies.

Shares of Bellamy's rose as much as 54.69% following the news.

The parties have entered into a scheme implementation deed under which the Chinese dairy giant proposes to buy all the issued shares of the Australian company through a scheme of arrangement.

China Mengniu said it plans to acquire Bellamy's shares for A$12.65 each, representing a 52.04% premium to Bellamy's closing price of A$8.32 on Sept. 13. It expects to fund the deal using internal resources and bank financing.

Meanwhile, Bellamy's said in its filing that its board recommends that shareholders vote in favor of the proposal. If approved, Bellamy's shareholders will receive a total of A$13.25 for each share, including the A$12.65 per share from China Mengniu plus a fully franked special dividend of 60 Australian cents paid by Bellamy's prior to the implementation of the acquisition.

China Mengniu said the move is in line with its goal to capture a significant share in the organic infant milk formula and baby food categories in China and Southeast Asia. It added that it expects to benefit from the presence of Bellamy's in Australia, New Zealand and a number of Southeast Asia countries.

Following the acquisition, Bellamy's will become an indirect wholly owned subsidiary of China Mengniu. The latter said it will support Bellamy's growth in existing markets and in entering the Chinese and other Southeast Asian markets.

In addition, China Mengniu will establish a subsidiary in Australia, which will hold all shares of Bellamy's. The new unit will engage in the manufacture and distribution of dairy products such as milk, ice-cream, milk formula and other dairy products.

For the year ended June 30, Bellamy's audited net profit after tax was A$21.7 million. The company's net assets are worth approximately A$232.3 million as of June 30.

In mid-morning trading in Australia, Bellamy’s stock traded up A$4.55, or 54.69%, at A$12.87.