Kirin Holdings and Lion have confirmed an agreement to sell the Dairy & Drinks business to Bega Cheese for $560 million.

The sale is just shy of the $600m that was initially on the table from Chinese-owned Mengnui Dairy, in a deal that was announced last year but ultimately fell through.

Lion’s decision to offload Dairy & Drinks is a part of its wider strategy to increase the focus in its adult drinks division.

The sale is unconditional; including no further regulatory approvals required and is expected to be complete in early 2021.

It includes all the white milk, milk-based beverages (MBB), yoghurt, juice and water ice brands and assets.

It also includes the Lion Dairy & Drinks International business, and Dairy & Drinks’ share of the joint ventures Vitasoy Australia Products (Vitasoy) and Capitol Chilled Foods Australia (CCFA), as well as its minority shareholding in Made by Cow.

It also includes Dairy & Drinks’ licensing agreement for the Yoplait brand.

Lion CEO Stuart Irvine said that once complete it would allow the wider Lion business to invest more heavily in its priority adult drinks categories.

“The sale will see Bega, as an established dairy and food company with more than 120 years of heritage, well placed to drive the business forward given its deep dairy capabilities and strong commitment to iconic Australian brands and the local dairy industry.

“Today’s announcement is an important step forward. Both Dairy & Drinks and Lion will move into the year ahead with the focus and capital to realise our growth aspirations.

“The retained Lion business has a clear strategy to become a leading global, crafted adult drinks business. The completion of this sale will enable further investment behind our priority categories of core beer, craft beer and seltzer in both domestic and international markets.”

Once completed, this sale, together with the sale of the specialty cheese business to Saputo Dairy Australia for A $280 million (finalised in October 2019), will represent a full divestment of the Dairy & Drinks business.

Lion has been advised by Deutsche Bank as financial adviser, with King & Wood Mallesons as legal adviser.

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