August 25, 2020
China's Mengniu and Japan's Kirin cancel deal over Australia's Lion Dairy
China's Mengniu Dairy and Japan's Kirin Holdings have given up on the deal for Mengniu to purchase Kirin-owned Australia's Loin Dairy and Drinks, Reuters reported.
The announcement by both companies come after news that the Australian government will not allow the deal to take place, the first rejection since Australia's foreign investment laws were amended in July.
In a statement, Kirin said the US$430 million deal will be cancelled because it is doubtful that Australia's Foreign Investment Review Board (FIRB) will approve.
Australia's competition regulator FIRB approved the deal back in February, but according to the Australian Financial Review, the country's Treasurer Josh Frydenberg was against the deal taking place.
The amended foreign investment laws give the treasurer power to force divestment if a company could be a national security risk, or set conditions on agreements even after FIRB has approved the deal.
Australia and China are currently in a political row after Australia asked for an global inquiry into COVID-19's roots.
If Lion Diary were to be sold, Kirin would have been able to divest poor performing assets while giving Mengniu, partly owned by the Chinese government, ownership over Australian brands such as Dairy Farmers, Moove flavoured milk and Pura.