Darren Gray
February 21, 2020
The Age
The competition watchdog has given the green light to a $600 million deal that would see China Mengniu Dairy acquire Lion’s dairy and drinks business.
The competition watchdog has given the green light to a $600 million deal that would see China Mengniu Dairy acquire Lion’s dairy and drinks business.
The regulatory tick by the Australian Competition and Consumer Commission means that the fast-growing Chinese dairy giant will continue expanding and improving its capability to service growing Asian markets.
Under the deal, which still needs Foreign Investment Review Board approval, Mengniu will acquire big name Australian dairy and juice brands including Dairy Farmers, Big M, Pura, Daily Juice and Berri.
A key consideration of the ACCC was the potential impact of the deal on competition for the purchase of raw milk from dairy farmers in Gippsland, Victoria.
Lion owns dairy processing facilities at Morwell in Gippsland and Chelsea in suburban Melbourne. Mengniu through a subsidiary has an indirect interest in the dairy processor Burra Foods, which has a dairy facility at Korumburra in South Gippsland.
“While Burra and Lion D&D compete for the acquisition of raw milk, they are not close competitors, and our investigations concluded that dairy farmers are unlikely to switch between the two,” said ACCC deputy chairman Mick Keogh.
“The level of aggregation from the proposed acquisition will be relatively low, with Burra and Lion D&D combined acquiring less than 25 per cent of raw milk in Gippsland. Two other large raw milk buyers remain in the Gippsland region, Saputo and Fonterra, as well as some smaller processors,” he said.
The proposed Mengniu/Lion deal was announced in November, shortly after Treasurer Josh Frydenberg gave conditional approval to Mengniu to buy Australian infant formula company Bellamy’s Organic in a $1.5 billion deal.
Mengniu is listed in Hong Kong and the Chinese government-owned entity Cofco owns about 16.2 per cent of the company.
_ more to come _
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