Kirin Holdings Co and China Mengniu Dairy Co said on Tuesday they have given up on the sale of the Japanese company’s wholly-owned Australian dairy firm Lion-Dairy and Drinks Pty Ltd to the Chinese company.
The announcement follows a media report last week that the Australian government could block the deal in what would mark its first veto since it announced a shake-up of the country’s foreign investment laws in July.
Kirin said in a statement that the two companies had agreed to terminate the A$600 million ($430 million) transfer deal, signed last November, because approval from the Foreign Investment Review Board (FIRB) was unlikely to come.
The Australian Financial Review reported last week that Treasurer Josh Frydenberg had gone against the advice of the FIRB, which was in favour of approving the deal. The deal had won approval from Australia’s competition regulator in February.
The revised laws give the treasurer last-resort power to vary or impose conditions on deals even after FIRB approval, or force divestment in the event of a national security risk.
The changes came against the backdrop of increasing Sino-Australian tension after Canberra called for an international inquiry into the origins of the novel coronavirus, which was first reported in China at the end of last year.
The sale of Lion-Dairy would have advanced Kirin’s strategy of offloading underperforming assets, while giving the Chinese government part-owned company control of Australian household brands like Pura, Dairy Farmers and Moove flavoured milk.
“This is an unfortunate result, but the revival and restructuring of Lion-Dairy and Drinks are a top priority and we will continue to look for the best scenarios for the business with Lion,” Kirin said in a statement.
Source: Reuters.com