China Mengniu Dairy has agreed to buy Lion’s dairy and drinks business for $600 million.
Mengniu – which recently gained approval by the Foreign Investment Review Board to acquire infant milk formula business Bellamy’s Australia for $1.5 billion – would acquire brands including Dairy Farmers, Pura Milk, Daily Juice and Berri. The announcement was made on Monday.
Japan-owned Lion’s dairy and drinks business employs around 2,300 in Australia, and manufactures at 11 of its own and two joint venture sites. It has been divesting dairy assets to focus on beer, and recently sold its specialty cheeses business to Saputo for $280 million.
Lion processes roughly 825 million “milk equivalent” litres per year, sourced in-country, and from New Zealand and Europe. According to Mengniu it will increase the amount of milk sourced from Australian suppliers.
“This acquisition brings together the best of the East and West, harnessing Mengniu Dairy’s networks in existing markets and D&D’s leading brands and production capability,” Mengniu Dairy chief executive Jeffrey Minfang Lu said in a statement.
“I truly believe our proposed acquisition will bring tremendous opportunity for the entire Australian dairy sector, opening up a channel to our home market in a very significant way. We have a strong track record of maintaining sustainable development in the markets we are in, which has been beneficial to local communities and the broader economy.
Mengniu said it expects a FIRB judgement on the acquisition in the first half of next year.
China Mengniu Dairy is Hong Kong-listed and 16 per cent owned by COFCO, a Chinese government-owned food conglomerate.
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