Upon approving the takeover, Mr Frydenberg said FIRB has consulted extensively on all relevant issues and he believed the conditions attached to the sale should satisfy everybody.

"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,'' he said in a statement.

Without foreign capital and investment, Australia’s output, employment and standard of living would be lower. — Josh Frydenberg

"The decision will also provide opportunities for the suppliers that contribute to Bellamy’s products, including Australian dairy farmers.

"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."

Driving down share price

Bellamy’s has the fourth largest share in the Australian infant milk formula market.

Mr Frydenberg made no mention of allegations that China played dirty pool in the lead-up to the acquisition by driving down Bellamy's share price.


China Mengnui is part-owned by Chinese state-owned enterprise China National Cereals, Oils and Foodstuffs Corporation (COFCO).

Before Bellamy’s board accepted the offer, its share price had plunged 62 per cent over 18 months, due largely to delays in securing registration from China’s State Administration of Markets Regulations (SAMR) agency to sell its organic baby formula in Chinese retail outlets. It was trading at $12.95 on Thursday.

Mr Frydenberg's approval of the takeover follows an approval by FIRB, revealed last month by The Australian Financial Review, of Sinosteel's acquisition of Mitsubishi's interest in the $9.7 billion Oakajee Port and Rail project in Western Australia. Two Sinosteel subsidiaries paid a peppercorn price of $3 each for the respective 50 per cent stakes.

The Bellamy's decision did not involve critical infrastructure such as gas or electricity assets and, thus, presented the government with an opportunity to to send a positive message to Beijing.

It comes at a sensitive period in relations between China and Australia. Two weeks ago, Prime Minister Scott Morrison and Chinese Premier Le Keqiang met on the sidelines of the ASEAN summit in Bangkok and both agreed the relationship needed work.

"China and Australia should step up joint efforts to enhance mutual understanding and trust, properly handle differences, and return bilateral ties to the normal track,'' Premier Li said, according to a Foreign Ministry statement.

He stressed China was "implementing measures to expand opening up in the service sector, which will provide important opportunities for all countries, including Australia".


Mr Frydenberg said foreign investment under the appropriate conditions was important for Australia.

"Without foreign capital and investment, Australia’s output, employment and standard of living would be lower,'' he said.

"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."

He said the conditions were enforceable under Australian law and penalties applied if there was a breach.

'Many Australians will be uneasy'

Mr Wilkie, who is from Tasmania, where Bellamy's began as a family-owned operation, was sceptical whether the conditions would work.

“Many Australians will be uneasy with this sale for all sorts of reasons, and it’s important that the FIRB be seen to act quickly and competently and be prepared to stop it if need be," he said in September.

He cited the Chinese company Moon Lake's 2016 takeover of Australia's biggest dairy farm, Tasmania's VDL Farms.


It later breached loan conditions, casting doubt on conditions imposed by then Treasurer Scott Morrison that the company spend $100 million to upgrade the dairy operation and create an extra 95 jobs.

With Bellany's now sorted, Mr Frydenberg faces more tough foreign investment regulatory decisions on China-linked investments, including Rio Tinto and potentially Crown Resorts.

FIRB and the government have taken a hardline view towards Chinese investments, especially in critical infrastructure, after the Northern Territory government leased the Port of Darwin to Chinese company Landbridge.

In 2016, the government blocked the Beijing-backed State Grid from buying NSW electricity distributor Ausgrid.

In November last year, Mr Frydenberg stopped the privately owned Hong Kong company Cheung Kong Infrastructure from buying gas distributor APA Group for $13 billion.

The government last year blocked Chinese telcos Huawei and ZTE from supplying equipment to Australia’s 5G wireless technology networks.