Chinese firm’s $600m milk deal collapses
A lucrative deal to sell the company behind some of Australia's most popular milk brands to a Chinese firm has been called off.
The $600 million sale of Lion Dairy and Drinks to Mengniu Dairy was first announced last December.
While Lion produces some of the country's top-selling dairy products - including Dairy Farmers, Pura, Dare, Farmers Union, Big M and Vitasoy as well as Yoplait yoghurt and Daily Juice - it is actually owned by Japanese beverage giant Kirin.
The dairy and drinks component of the business employs around 2300 people across Australia, Singapore, Malaysia and China.
Breaking - Treasurer @JoshFrydenberg confirms he told Mengniu Dairy he would likely to block the company's purchase of Lion Diary as "the proposed acquisition would be contrary to the national interest." No further details or explanation at this stage. pic.twitter.com/w1XUraJQkm— Stephen Dziedzic (@stephendziedzic) August 25, 2020
But the $600 million proposed sale proved to be controversial, with Treasurer Josh Frydenberg a vocal opponent along with a string of other politicians.
However, it had been approved by the Australian Competition and Consumer Commission back in February, after ruling Mengniu's proposal to acquire Lion's raw milk processing facilities in Australia would not substantially lessen competition.
The sudden collapse of the deal was confirmed by Kirin in a statement on Tuesday.
"Lion notes that China Mengniu Dairy Company Limited has been awaiting the outcome of the Foreign Investment Review Board review of its proposed purchase of Lion Dairy & Drinks," the statement said.
"Given this approval is unlikely to be forthcoming at this time, Lion and Mengniu Dairy have mutually agreed to cease the current sale process.
"We are disappointed with this outcome and will now consider pathways forward in relation to the Lion Dairy & Drinks business."
It's a sad end for the deal which was originally lauded by both sides, with Lion chief executive Stuart Irvine claiming the sale would "ensure it has an owner that is well placed to grow the business over the long term, while also accelerating Lion's pivot to becoming a leading global adult drinks business" at the time.
However, Lion is not the only Aussie-linked company Mengniu has been eyeing off lately, with the Federal Government approving the $1.5 billion sale of Australian baby formula success story Bellamy's to the firm.
The failed takeover comes after months of ongoing trade tensions between Australia and China.
In a statement sent to news.com.au, Treasurer Josh Frydenberg said he had been advised the two companies had "mutually agreed to not proceed with the sale process".
"This follows the communication of my preliminary view to Mengniu Dairy that the proposed acquisition would be contrary to the national interest," he said.