Lion’s $600 million sale of its dairy and drinks business to China’s Mengniu Dairy Company is off.
After receiving clearance from the ACCC in February, the final hurdle to the deal being settled was approval from the Foreign Investment Review Board.
However in a short statement issued this morning Lion 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.”
Lion struck a deal with China Mengniu Dairy last November to sell the division. The sale was to include all of Lion’s milk, milk-based beverages, yoghurt, juice and water brands, as well as its international business, its share of joint ventures Vitasoy Australia Products and Capitol Chilled Foods Australia, and a licensing agreement for Yoplait.
As part of the deal, Mengniu would have acquired Lion’s raw-milk processing facilities, two of which are located in Chelsea and Morwell in Victoria. Gippsland is the only area which has processing facilities ultimately owned by both Lion D&D and Mengniu, the latter of which owns an indirect interest in Burra Foods Pty Ltd, which has a milk processing facility in Korumburra, Victoria.
There were concerns this might have caused market dominance in the region and reduce the options of local dairy farmers in supplying milk for processing. However the ACCC did not consider it an issue.
“While Burra and Lion D&D compete for the acquisition of raw milk, they are not close competitors, and our investigations concluded that dairy farmers are unlikely to switch between the two,” ACCC Deputy Chair Mick Keogh said at the time.