Lion Dairy and Drinks will now come under Australian ownership after the federal treasurer blocked attempts to sell the firm to Chinese dairy giant Mengniu in August.
Following months of speculation, Bega Cheese confirmed it would acquire the entirety of Lion Dairy from Japanese company Kirin Holdings after agreeing to pay $534 million.
“We are delighted to announce this acquisition which we believe will create significant value for shareholders,” Bega Cheese CEO Barry Irvin said in an ASX announcement.
“The expanded product range, manufacturing and distribution infrastructure and brand portfolio realise our ambition of creating a truly great Australian food company,” he said.
Bega Cheese, already an Australian household name, will expand its product range considerably with Lion Dairy’s stable of market-leading brands including Dare, Pura, Yoplait, Farmers Union, and Vitasoy.
Lion Dairy made headlines in August following Treasurer Josh Frydenberg’s decision to allow an outstanding $600 million acquisition offer from China Mengniu Dairy Co. to lapse.
Despite receiving approval from the Foreign Investment Review Board (FIRB) and the Australian Consumer and Competition Commission, the treasurer decided against giving the final thumbs up for the deal to go ahead.
Previous owner Kirin released a statement (pdf) saying, “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.”
The decision came amidst an ongoing Beijing-instigated trade dispute and concerns over foreign ownership of sensitive assets.
In April, the treasurer blocked two Chinese-backed mining firms from investing in local rare earth mining firms, an industry marked by concerns over Beijing’s supply chain dominance.
New laws were also announced in June to tighten foreign investment laws and give the treasurer power to veto potential sales on national security grounds.
As a result, FIRB approval for foreign investment deals has been slow coming in recent months and has caused some Chinese firms to back out of buying Australian assets.
Last week, Chinese investors withdrew an $80 million offer to purchase an office tower in Sydney’s CBD following delays in receiving approval.