A $600 million deal to sell the maker of Pura milk, Dare iced coffee and Yoplait yoghurt to a Chinese company has been terminated, after Treasurer Josh Frydenberg decided the sale was «contrary to the national interest».
Lion Dairy and Drinks owns several well-known brands sold in Australia
It was set to be sold to China’s Mengniu Dairy, but the deal did not secure foreign investment approval
The deal has now been called off due to the delay
Japanese-owned beverage giant Kirin announced the sale of Lion Dairy and Drinks to Mengniu Dairy last November.
But the deal quickly became ensnared in the broader geopolitical tensions between Australia and China.
Beijing has hit several Australian exporters with trade sanctions, while a number of federal MPs and senators have campaigned against the Lion deal, warning that it could undermine local milk supplies.
Last week the Australian Financial Review reported the Federal Government had decided to block the sale.
Today, Kirin released a statement announcing the deal had been abandoned.
«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.»
In a statement, Mr 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.
But the Treasurer did not provide any further information expanding on his concerns or explaining how the deal would damage Australia’s interests.
Lion owns several iconic brands including Dairy Farmers, Masters and Pura milk.
Its portfolio also includes Dare and Farmers Union iced coffee; Big M, Dairy Farmers and Pura Classic flavoured milk; Vitasoy soy milk and coconut milk; juice brands Daily Juice, The Juice Brothers and Berri; and Yoplait yoghurt, under licence.
The Australian Competition and Consumer Commission approved the Lion sale in February, after considering the potential impact on competition.
The Federal Government is still working on a broader overhaul of foreign investment laws which will require the Treasurer to sign off on foreign investments which have national security implications.
Earlier this year the Coalition introduced temporary new rules to protect financially troubled Australian companies from foreign takeovers.
Last year the Federal Government approved the sale of Australian infant baby formula business Bellamy’s for $1.5 billion to Mengniu.
Mr Frydenberg has been contacted for comment.
China’s Foreign Ministry spokesman Zhao Lijian did not comment directly to the decision, but said «we hope Australia will provide fair and unbiased business environment for Chinese companies operating there».