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Treasurer Josh Frydenberg has given the green light to China Mengniu Dairy Company's $1.5 billion takeover of infant formula producer Bellamy's (ASX: BAL), albeit with a few caveats.
The treasurer concludes the acquisition is "not contrary to the national interest" following a unanimous recommendation from the Foreign Investment Review Board (FIRB), which conducted an extensive period of consultation over the last few months.
The deal will have enforceable conditions however, including a requirement that the majority of the Bellamy's board of directors are Australian resident citizens and that Bellamy's keeps its headquarters in Australia for at least 10 years.
The suitor will also have to invest at least $12 million in establishing or improving infant milk formula processing facilities in Victoria.
"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," says Frydenberg.
"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."
The implementation of a scheme of arrangement for the acquisition will still be subject to a shareholder vote on 5 December and court approval.
In the absence of a superior proposal and if all conditions are met, all Bellamy's directors plan to vote in favour of the acquisition.
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