Treasurer Josh Frydenberg has played a straight bat to concerns Chinese interests might have manipulated Bellamy's Australia Limited's share price leading up to a Chinese takeover bid.
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Greens Senator Peter Whish-Wilson wrote to Mr Frydenberg on Tuesday asking that he examine or direct the Foreign Investment Review Board to examine matters including whether any actions by the Chinese government, including withholding import approvals, had suppressed the share price of Tasmanian-based organic baby food and formula company Bellamy's ahead of the $1.5 billion takeover offer by partly state-owned China Mengniu Dairy Company Limited.
"As you would be aware, over the past 18 months Bellamy's has had various import approvals for its product outstanding with the Chinese State Administration for Market Regulation (SAMR)," Senator Whish-Wilson wrote.
"During this time, the company's share price fell from around $22 to around $8, representing an over 60 per cent reduction in market valuation.
"Now a Mengniu- a company in which the Chinese government is the largest shareholder - is making a takeover bid at $13.25 per share."
Asked for a response to Senator Whish-Wilson's letter and for any other thoughts about the takeover bid, Mr Frydenberg said the government did not comment on specific foreign investment matters.
"Foreign investment is an important contributor to Australia's economy and standard of living," Mr Frydenberg said.
"Australia maintains a non-discriminatory, case by case approach to considering foreign investment proposals."
The government could potentially block the deal.
In the early months of the Coalition government in 2013, then-treasurer Joe Hockey blocked a US company's bid to take over GrainCorp, following pressure from the rural sector and the Nationals.
At the time, Mr Hockey argued the sale was not in the national interest and, given the level of public concern, allowing it could risk undermining public support for foreign investment.
Senator Whish-Wilson also asked Mr Frydenberg to examine:
- Whether any Chinese government activity in relation to Bellamy's was inconsistent with the national interest test under the Foreign Acquisitions and Takeovers Act;
- whether a Bellamy's sale while SAMR approvals were outstanding would be inconsistent with the national interest test; and
- what precedents existed for a takeover by a foreign company in which a nation state was the biggest shareholder and where regulatory decisions by the nation state had a material impact on the target company's valuation.
"It is imperative that you and your government, when considering foreign investment, ensure the integrity of Australia's market-based system. and that you ensure that investments made by Australian shareholders are not undermined by foreign interests seeking to manipulate Australia's market-based system," Senator Whish-Wilson wrote.
