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China's Mengniu To Acquire Infant Formula Maker Bellamy's

By Steve Wynne-Jones
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China's Mengniu To Acquire Infant Formula Maker Bellamy's

Chinese dairy giant Mengniu has announced the acquisition of Bellamy's Australia Ltd, an organic infant formula maker, for A$1.5 billion (€920 million).

The business offered A$13.25 per share in its take-over bid for Bellamy's, which was a 59% premium on the stock's last closing price.

Competitive Market

The takeover is likely to provide a boost to both Mengniu and Bellamy's in the competitive infant formula market in China, according to Dean Best, food editor at GlobalData.

“Infant formula is one of the more buoyant parts of the overall dairy industry in China, but an area where Mengniu lacks scale," he said.

“The recent performance of Mengniu's infant formula business has been patchy and the company has lagged behind key dairy competitor Yili in the key online channel. Buying the organic-focused Bellamy's can give Mengniu a notable presence in a thriving and higher-margin part of China's infant-formula market."

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Organic Formula

Organic infant formula is on the rise in China, particularly among high-income families in tier-one and tier-two cities.

“Mengniu will have to tread carefully. China has proved problematic for Bellamy's in recent years, with sales hit by a delay in securing registration from Beijing for the sale directly in stores of Chinese-label infant formula," Best added.

“However, Bellamy’s Australian-label product portfolio continues to expand and the backing of Mengniu, one of China’s largest dairy companies, could improve distribution."

© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.

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