The proposed AU$600 million ($430 million) sale of one of Australia’s largest dairy firms, Lion Dairy & Drinks, to China Mengniu Dairy Co. has been called off.
Lion owns local brands Pura Milk, Dairy Farmers, Dare, and Vitasoy.
Its Japanese owner, beverage company Kirin Holdings, confirmed in an investor update (pdf) on Aug. 25 that, despite receiving the go-ahead from Australia’s competition watchdog in February for the sale, it was unlikely to receive approval from the Foreign Investment Review Board (FIRB).
FIRB approval, and permission from the Federal Treasurer Josh Frydenberg, were the final hurdles for the deal to proceed.
“Given this approval has not been secured to date and is unlikely to be forthcoming at this time, regrettably, the parties have agreed to terminate the Agreement,” Lion said in the statement.
Frydenberg released a statement on the same day, saying, “I have been advised that Lion Dairy & Drinks and China Mengniu Dairy Company have 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.
Last year, Frydenberg approved Mengniu’s $1.5 billion acquisition of Bellamy’s Organic.
However, the latest decision comes amid a backdrop of rising diplomatic tensions between Beijing and Canberra, as well as the Chinese regime’s recent anti-dumping investigation into Australian wine.
This year, the treasurer blocked two Chinese-backed mining firms from investing in Australian rare earth mining firms. In June, he also announced a tightening of foreign investment laws on national security grounds.
Mengniu entered into negotiations with Kirin about the purchase of Lion in November 2019.
Mengniu is 31 percent owned by the China National Oils, Foodstuffs and Cereal Corp., a state-owned entity and China’s largest importer and exporter of food.
Bega Cheese is considered a leading contender to acquire Lion Dairy.