The Chinese dairy heavyweight behind the $1.5 billion bid for organic infant formula maker Bellamy’s Australia has agreed to acquire another of Australia’s biggest dairy operations.
China Mengniu Dairy Company will pay Japanese beverage giant Kirin $600 million for the Lion Dairy and Drinks portfolio, the company said in November.
The Lion brands include Dairy Farmers, Masters and Pura milk; Dare and Farmers Union iced coffee; Big M, Dairy Farmers and Pura Classic flavoured milk; Vitasoy soy milk and coconut milk; juice brands Daily Juice, The Juice Brothers and Berri; and Yoplait yogurt, under licence.
The portfolio has been on the market since October 2018, when Lion decided to concentrate on its beer business including James Squire, Little Creatures, Tooheys and XXXX.
Lion said it decided to approach Mengniu Dairy after reaching an agreement in April to sell the specialty cheese component of Lion Dairy and Drinks to Saputo Dairy for $280 million.
"The full divestment of the Dairy and 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," Lion chief executive Stuart Irvine said.
Dairy and Drinks employs about 2300 people across Australia with others based in Singapore, Malaysia and China, and has 11 manufacturing sites around Australia.
Mengniu Dairy chief executive Jeffrey Minfang Lu said the acquisition would benefit both Lion Dairy and Drinks and Mengniu Dairy as well as providing opportunities for Australian dairy farmers and fruit growers, by opening up a significant channel to China.
The company buys about 825 million "milk equivalent" litres a year from around 280 Australian dairy farmers, as well as 50 million kg of fresh fruit from around 85 fruit growers.
Mengniu said it currently buys milk from dairy processors in New Zealand and Europe, and once the acquisition clears it would step up its purchases from Australian suppliers.
The acquisition is subject to Australian Competition and Consumer Commission and Foreign Investment Review Board approvals.
It is expected to clear in the first half of 2020, China Mengniu Dairy said.
China Mengniu’s acquisition of Bellamy’s Australia received Foreign Investment Review Board approval on November 15 and will be voted on by shareholders on December 5.