News Takeover
Mengniu offers millions for dairy company Australia
Mengniu, the second largest dairy company in China after Yili, has made an offer for one of the largest Australian dairy companies. The dairy is paying $600 million for the 'Lion Dairy & Drinks' portfolio, which is wholly owned by Japanese beverage giant Kirin.
Chinese dairy company Mengniu has made a $600 million bid for Lion Dairy & Drinks, which includes popular Australian beverage brands Dairy Farmers, Daily Juice and Big M. Ross Greenwood, a journalist at 9News, writes that this is a pittance, however. "About 5 years ago Lion paid $2 billion for that portfolio. The fact that it is now likely to be sold for $600 million shows how difficult the Australian dairy industry is."
As Lion Drinks controls about 20% of the Australian milk market, questions have arisen as to whether the dairy products will go to Australian consumers or to the Chinese market. "That is a sensitive point for many farmers in Australia, because many dairy products are already imported. Many farmers have stopped their business and milk production has been declining for years," said Greenwood.
More acquisitions in the pipeline?
However, this is not the only Australian dairy company that Mengniu has made a multi-million offer. That Chinese dairy company previously made an offer of more than $1,5 billion for Bellamy's Australia, a producer of organic baby food. According to Mengniu, both acquisitions should help the dairy industry in Australia grow.
The acquisitions still have to be approved by the Australian Competition and Consumer Commission (ACCC) and the Foreign Investment Review Board (FIRB).
Kimberly Baker
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