(Yicai Global) Sept. 16 -- China Mengniu Dairy, the second-biggest dairy company in China, plans to buy milk powder maker Bellamy's Australia for up to AUD1.5 billion (USD1 billion).

Mengniu will set up a subsidiary in Australia to conduct the acquisition and will use a combination of its own money and bank loans to fund the deal, the Inner Mongolia Autonomous Region-based buyer said in a filing to the Hong Kong Stock Exchange today.

Bellamy's stock [ASX:BAL] skyrocketed by almost half on the news to open at AUD12.40 (USD8.52), close to Mengniu's proposed price of up to AUD12.65 a share.

Founded in Tasmania, Bellamy's has a reputation around the Asia-Pacific region for its organic infant formula and children's food. It earned USD31.4 million (USD21.6 million) in net profit over the first half and had AUD232 million in net assets.

Editor: James Boynton