Milk and money

17 September 2019 By Katrina Hamlin Follow @KatrinaHamlin

State-backed Mengniu wants to buy Bellamy’s, a maker of infant formula, for some $980 mln. The premium looks frothy, and such tie-ups have soured before. But if local ties mean licences and an Aussie brand lures wealthy buyers, shareholders are right to bet on success.

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China setbacks spoil Australia’s dairy strategy

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China Mengniu Dairy has offered to buy infant-formula maker Bellamy's Australia for A$12.65 a share, according to filings on Sept. 16. It has also promised a A$0.60 per share special dividend. Including that payout, the offer amounts to a 59% premium to Bellamy’s closing price on Sept. 13, the last trading day before the deal was announced. Excluding the dividend, the premium is closer to 52%.

Bellamy’s shares rose by 55% to A$12.89 on Sept. 16. Shares in China Mengniu fell 2.3% to HK$30.8.

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