China’s Mengniu Dairy has entered an agreement to buy Australian Lion Dairy & Drinks from Kirin Holdings for AUD $600 million ($407 million), marking the company’s second acquisition in the Australian dairy market in recent months.
The deal includes all white milk, milk-based beverages, yogurt, juice and water ice brands and assets, as well as Dairy & Drinks’ licensing agreement for the Yoplait brand.
As part of the deal, Mengniu will take ownership of Lion’s beverage unit’s international business and its share of the joint ventures with Vitasoy Australia Products and Capitol Chilled Foods Australia.
Meanwhile, Lion’s alcohol businesses in Australia and New Zealand, and its global Lion Little World Beverages firm will not be affected by the sale.
Mengniu Dairy’s latest acquisition comes nearly two weeks after Australian authorities conditionally approved its proposed acquisition of infant formula producer Bellamy’s Australia, after it made a bid of approximately $1bn earlier this year.
Kirin Holdings announced the consideration of the sale of its Lion’s beverage unit last year, as it aimed to position the business for maximum growth for the future.
Lion CEO Stuart Irvine said: “We believe that Mengniu Dairy, a specialty dairy player, is an ideal owner to take Dairy & Drinks forward, given its track record of investing in the Australian dairy industry, together with its global reach and deep capabilities.
“Bringing the businesses together will help drive Mengniu Dairy’s growth in the Australian domestic market, while also accelerating Dairy & Drinks’ aspirations in South East Asia and China. In addition, Dairy & Drinks will benefit from access to leading-edge dairy research and development capability and further investment as part of the Mengniu business.”
Once the transaction is closed, together with the sale of its speciality cheese business to Saputo Dairy Australia for AUD $280 million ($191.7 million), that was completed in October earlier this year, the deal will represent a full divestment of the Dairy & Drinks business.
Irvine added: “The full divestment of the Dairy & Drinks business will ensure it has an owner that is well placed to grow the business over the long term, while also accelerating Lion’s pivot to becoming a leading global adult drinks business.”
Mengniu Dairy’s recent deal is once again subject to the approval of the ACCC and the Foreign Investment Review Board.
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