Bellamy's shareholders hit jackpot with $1.5 billion takeover offer

Bellamy's shareholders hit jackpot with $1.5 billion takeover offer

Organic milk formula brand Bellamy's has received a takeover offer from a leading Chinese dairy producer.

The proposed deal values the Australian brand at approximately $1.5 billion, and a material premium of 59 per cent compared to the company's last closing share price.

Under the deal, shareholders would receive $13.25 cash per share comprising $12.65 cash per share from the Chinese producer China Mengniu Dairy Company ('Mengniu') and $0.60 per share fully franked special dividend paid by Bellamy's prior to the implementation of the scheme.

Shares have skyrocketed following the takeover announcement, up 54.5 per cent to $12.86 per share at 11.54am AEST.

The board of directors of the listed organic formula brand has come out in favour of the proposal from Mengniu, with Bellamy's chair John Ho saying the deal reflects the value of the company.

"The proposed Scheme is an attractive all-cash transaction at a 59 per cent premium to the prevailing share price," says Ho.

"It reflects the strength of the Bellamy's brand, the dedication of 160 passionate employees and the progress of our turnaround plan."

Mengniu is a leading Chinese dairy manufacturer listed on the Hong Kong Stock Exchange with a market capitalisation of $24.6 billion.

The company has manufacturing sites in New Zealand and Indonesia and distributes its products to Hong Kong, Singapore, Macau, Myanmar and Indonesia.

The deal is subject to a number of conditions including the approval from Bellamy's shareholders, the court and the Australian Foreign investment Review Board.

The takeover offer comes as Bellamy's has emerged optimistic following a rough FY19.

The company posted a statutory NPAT of $21.7 million for FY19, down nearly 50 per cent from FY18's strong $42.8 million profit.

Revenue was also down by 19 per cent to $266.2 million, and EBITDA was down 46 per cent to $34.9 million.

The company blamed its disappointing results on stiff regulation and a lower birth rate, as well as increased competition for Chinese demand.

At the end of the financial year the company began to work on a "transformational rebrand" of the business which Bellamy's says has been gaining momentum since its March launch.

Sales have picked up during Q4 for the business, and Bellamy's says that leading consumer indicators are positive, including an uptick in e-commerce sales, brand interest, and China sales.

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