Bellamy’s Australia Limited (ASX:BAL Bellamy’s) has entered into a Scheme Implementation Deed under which it is proposed that China Mengniu Dairy Company Limited (SEHK:2319 Mengniu) will acquire 100% of the issued share capital of Bellamy’s via a scheme of arrangement (the Scheme). If the Scheme proceeds, it is intended that Bellamy’s shareholders receive a total of $13.25 cash per share (Cash Amount) comprising:

• $12.65 cash per share from Mengniu under the Scheme; and
• $0.60 per share fully franked special dividend paid by Bellamy’s prior to implementation of the scheme as outlined below (Special Dividend).

The Cash Amount values Bellamy’s equity at approximately $1.5 billion. This compares favourably to precedent transaction multiples and represents an enterprise value of 30 times reported normalised FY19 EBITDA.

The Cash Amount represents a material premium to the prevailing share price:

• 59% premium to the closing price on 13 September 2019 of $8.32; and
• 54% premium to the 3-month volume weighted average price to 13 September 2019 of $8.59

Bellamy’s Board of Directors unanimously recommend that Bellamy’s shareholders vote in favour of the Scheme, in the absence of a superior proposal and subject to an Independent Expert concluding (and continuing to conclude) that the Scheme is in the best interests of Bellamy’s shareholders. Each Director of Bellamy’s intends to vote all the Bellamy’s shares that he or she holds or controls in favour of the Scheme, subject to those same qualifications.

Bellamy’s Chair, John Ho, said: “The proposed Scheme is an attractive all-cash transaction at a 59% premium to the prevailing share price. It reflects the strength of the Bellamy’s brand, the dedication of 160 passionate employees and the progress of our turnaround plan.”

Bellamy’s Deputy Chair, John Murphy, added: “Following careful consideration of the offer, the Bellamy’s Board has unanimously concluded that the Scheme is in the best interests of shareholders.”

Bellamy’s Chief Executive Officer, Andrew Cohen, said: “Mengniu is a preeminent dairy company in China and an ideal partner for our business. It offers a strong platform for distribution and success in China, and a foundation for growth in the organic dairy and food industry in Australia.”

Mr Cohen added: “This transaction can further deliver on our founder’s original vision of a truly iconic Australian brand and ‘A Pure Start to Life’ for the world. Our employees, our trade partners and local organic manufacturers will continue to grow and thrive with the success of our business”

Mengniu’s Chief Executive Officer, Mr Jeffrey, Minfang Lu, said: “Bellamy’s is a leading Australian brand with a proud Tasmanian heritage and track record of supplying high quality organic products to Australian mums and dads. This leading organic brand position and Bellamy’s local operation and
supply-chain are critical to Mengniu.”

To read the full ASX report, click here.