Treasurer Josh Frydenberg has attempted to protect Australian jobs and interests while approving a Chinese takeover of Bellamy's Australia Limited.
Mr Frydenberg outlined several enforceable conditions which would apply to China Mengniu Dairy Company Limited if shareholders in Tasmanian-based baby food and formula company Bellamy's voted in favour of the $1.5 billion deal.
The conditions would require:
- A majority of Bellamy's board members to be Australian citizens;
- keeping the headquarters in Australia for at least 10 years; and
- spending at least $12 million in establishing or improving infant milk formula processing facilities in Victoria.
"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," Mr Frydenberg said.
"The decision will also provide opportunities for the suppliers that contribute to Bellamy's products, including Australian dairy farmers," Mr Frydenberg said.
The Bellamy's board has unanimously recommended shareholders accept Mengniu's offer to acquire the company via a scheme of arrangement.
Shareholders will vote at a scheme meeting on December 5.
Mr Frydenberg said the Foreign Investment Review Board considered a wide range of issues relating to the deal and undertook extensive consultation.
He said his conclusion the acquisition was not against Australia's national interest was consistent with the FIRB's unanimous recommendation, and the conditions would ensure the acquisition was not against the national interest.
"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," he said.
"The Morrison Government welcomes foreign investment where it is consistent with our national interest.
"Without foreign capital and investment, Australia's output, employment and standard of living would be lower.
"The conditional approval demonstrates our foreign investment rules can facilitate such an acquisition while giving assurance to the community that decisions are being made in a way which ensures that Australia's national interest is protected."
The proposed deal has not been without controversy.
Greens Tasmanian Senator Peter Whish-Wilson raised his concerns with the FIRB and Mr Frydenberg's office after the bid was announced.
He suggested Chinese interests might have manipulated the Bellamy's share price before the bid was announced.
That was based on long delays Bellamy's faced in getting Chinese import approvals, which would have damaged its share price.
On Friday, Senator Whish-Wilson said he was "pretty chuffed" he had been listened to and that the conditions were enforceable and binding.
He said the outcome was superior to when other Chinese interests took over the VDL dairy operations in Tasmania and the new ownership did not meet undertakings which were non-binding.
"While this approval is regrettable and will be greeted with more community frustration, we welcome the decision to apply binding and enforceable conditions on the sale of Bellamy's such as compelling local investment and employment," he said.
"This move from the Treasurer clearly acknowledges the problems with the previous controversial Van Diemen's Land approval where promises were voluntary and have not been implemented.
"I have repeatedly written to the Treasurer and raised the issue in parliament regarding Moon Lake Investments not meeting its voluntary undertakings in relation to the purchase of Van Diemen's Land.
"I outlined to the Senate in a motion in July the process to impose additional conditions on Moon Lake Investments to make them come good on their promised $100 million investment and 95 new jobs."