Bellamy's Australia Ltd (ASX: BAL) shareholders got an early Christmas present today after the Foreign Investment Review Board approved its takeover of the China Mengniu Dairy Company Limited (Mengniu).
The September 16 takeover bid is worth $13.25 per share being a $12.65 per share cash offer plus a 60 cents per share fully franked special dividend to be paid prior to the scheme's implementation. The offer valued Bellamy's at around 30x FY 2019's EBITDA at a 59% premium to the September 13 share price of $8.32.
At the time of the offer more than 10% of Bellamy's outstanding shares were short sold to equal some painful losses for hedge funds betting on the share price falling.
More generally the takeover demonstrates how the market for Australian infant formula in China remains strong with other businesses like the a2 Milk Company Ltd (ASX: A2M) and Bubs Australia Ltd (ASX: BUB) also posting strong growth in China.
