More Than $500 Million Spent Bringing Australian Milk Brands Back Into Australian Hands
Lion Dairy and Drinks will be back in Australian hands after Bega Cheese announced a more than $500 million deal to buy the company from Japan's Kirin.
The Australian government intervened in November last year, after Kirin had organised a deal worth $600 million with China's Mengniu Dairy.
Treasurer Josh Frydenberg said the deal would be blocked on national interest grounds.
Kirin was forced to find a new buyer for Lion Dairy and Drinks, who owns Dairy Farmers, Masters, and Pura Milk, who produce the likes of Dare and Farmers Union iced coffees, Big M, Vitasoy soy milk and coconut milk; as well as juice companies like Daily Juice, The Juice Brothers and Berri.
The company is also famous for Australian beer brands like Tooheys, James Squire and XXXX.
Bega stepped up to the plate and outbid Canadian dairy conglomerate Saputo and financial firm Tanarra Capital. The Australian company will pay $534 million to acquire Lion Dairy and Drinks.
In order to pay for the deal, Bega will offer 87 million new shares, which equates to around $401 million.
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While it's fantastic that the company will be coming back to Australian hands, the original deal with Mengniu Dairy wasn't all that bad.
Mengniu gets some of its milk from dairy processors in New Zealand and Europe, however if the sale was approved then the company would have been able to ramp up its purchases from Australian suppliers.
Mengni already buys around 825 million 'milk equivalent' litres every year from hundreds of Aussie dairy farmers, according to AAP, as well as 50 million kilograms of fresh fruit.
Kirin said it was 'disappointed' when the deal was struck down.
The statement said: "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.
"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."
Featured Image Credit: Bega Cheese
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