China's Mengniu Dairy acquires Lion Dairy and Drinks

Lion Co

Friday, 29 November, 2019


China's Mengniu Dairy acquires Lion Dairy and Drinks

Kirin Holdings and Lion have reached an agreement to sell the Lion Dairy & Drinks business to the China Mengniu Dairy Company Limited (Mengniu Dairy) for AU$600 million. The sale includes all white milk, milk-based beverages, yoghurt, juice and water ice brands and assets. It also includes Lion Dairy & Drinks’ International business, and Dairy & Drinks’ share of the joint ventures Vitasoy Australia products, Capitol Chilled Foods Australia, and Dairy & Drinks’ licensing agreement for the Yoplait brand.

Mengniu Dairy Company previously purchased Australian organic baby formula maker Bellamy’s for $1.5 billion, meaning many notable brand such as Dairy Farmers, Dare, Farmer’s Union, Yoplait and Daily Juice will be under new ownership after the sale is finalised. However, the sale must be approved by the Australian Competition and Consumer Commission (ACCC) and the Foreign Investment Review Board (FIRB) before it can be finalised. The sale has prompted members of parliament, Senators Peter Whish Wilson and Andrew Wilkie, to call for a senate inquiry into market manipulation by China.

This sale, alongside the sale of the specialty cheese business to Saputo Dairy Australia for AU$280 million will represent a full divestment of the Dairy & Drinks business. Lion’s alcohol business in Australia and New Zealand and its Lion Little World Beverages business will not be affected by the Dairy & Drinks sale process.

“Our aim throughout has been to ensure that both Dairy & Drinks and the Lion business are ideally positioned for growth — with the right people, assets and investment behind their respective strategies,” said Stuart Irvine, Lion CEO.

Bringing both businesses together is expected to help drive Mengniu Dairy’s growth in the Australian domestic market, while accelerating Dairy & Drinks’ aspirations in South East Asia and China. The dairy research, development and further investment capabilities of the Mengniu Business are also expected to benefit Dairy & Drinks.

“We believe that Mengniu Dairy 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. 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,” Irvine said.

Image credit: ©stock.adobe.com/au/polack

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