Tasmanian-based infant formula company Bellamy's has recommended shareholders vote in favour of a proposed $1.5 billion takeover by Chinese company Mengniu.
The potential takeover offers a significant 59 per cent premium to the last closing price for Bellamy's shares. Shares closed on September 13 at $8.32, and the offer from Mengniu is $12.65 per share and a $0.60 dividend per share.
The board of Bellamy's has unanimously recommended that shareholders vote in favour of the offer.
Bellamy's CEO Andrew Cohen said Mengniu was an "ideal partner" for the 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 said.
Mengniu CEO Lu Minfan said the company had growth ambitions for Bellamy's in Australia and the broader Asia-Pacific region, and pointed to investment in the local dairy industry to ensure there was capacity to expand.
The deal is subject to Foreign Investment Review Board approval.
Board member John Murphy said he is hopeful that FIRB approval will be granted.
"At this stage we're in the process with FIRB. We're having full engagement and are co-operating in that process. It has a way to run, but we're feeling very positive. We don't want to get ahead of that process, we'll let it play through but at this stage we're feeling very positive that it will run a course."
The ABC has contacted the office of Treasurer Josh Frydenberg for comment.
