Infant formula maker Bellamy’s shares are in a trading halt – after Chinese authorities decided to suspend the export licence of its newly-acquired subsidiary.
The subsidiary in the firing line is Camperdown Powder Pty Ltd, a Victorian blending and canning facility, in which Bellamy’s purchased a 90 per cent indirect stake for $28.5 million.
In a statement to the ASX, Bellamy’s said it was trying “to determine the reasons and impact of the Camperdown’s suspension of its CNCA licence by the China authorities overnight”.
China is Bellamy’s major export market and, in recent months, the company has been plagued by problems with sales and regulations there.
Bellamy’s bought the Camperdown facility with the hope that it would guarantee access to the Chinese market, and form a key part of its turnaround strategy.
It was only on Tuesday that the embattled company raised $60.4 million to help fund the acquisition.
“The transaction has been approved, the money has been raised,” financial analyst Sam Baker said.
“But it now appears only a week later that the food and drug association in China has deregistered this facility – which was the primary purpose of the acquisition.
“There would have to be some questions raised in relation to the due diligence done by the company in relation to this facility.”