The proposed $600 million sale of Lion Dairy & Drinks to Chinese owned Mengniu Dairy has fallen through.

The deal, which was announced last year and had been approved by the Australian Competition and Consumer Commission (ACCC), was to include all LD&D’s white milk, milk-based drinks, yoghurt, juice and water brands and assets. The company’s share of joint venture Vitasoy Australia, Capitol Chilled Foods Australia and their licensing agreement for Yoplait were also included.

LD&D, who produce big brands Dairy Farmers, Pura, Farmers Union Iced Coffee, Dare and Big M, among others, is currently owned by Japanese owned Kiring Holdings. Doubts that the sale would be approval by the Foreign Investment Review Board was a major factor in the deal not proceeding.

In a statement released today LD&D confirmed the companies had ‘mutually agreed’ not to proceed with the sale.

“Lion notes that China Mengniu Dairy Company Limited (Mengniu Dairy) has been awaiting the outcome of the Foreign Investment Review Board (FIRB) review of its proposed purchase of Lion Dairy & Drinks. Given this approval is unlikely to be forthcoming at this time, Lion and Mengniu Dairy have mutually agreed to cease the current sale process,” it read.

“We are disappointed with this outcome and will now consider pathways forward in relation to the Lion Dairy and Drinks business.”

In an update to investors, Kirin announced that ‘regretfully’ the share price agreement announced last November had been terminated. Kirin said the decision was based on serious doubts the FIRB would grant approval for Mengniu Dairy subsidiary Monday Smoothie to purchase LD&D.

“FIRB approval is a Condition Precedent to the Agreement. Given this approval has not been secured to date and is unlikely to be forthcoming at this time, regrettably, the parties have agreed to terminate the Agreement.”

Kirin added the future of LD&D’s business would be re-examined.

Federal Treasurer Josh Frydenberg also issued a statement on the news, acknowledging his opposition of the sale.

 “This follows the communication of my preliminary view to Mengniu Dairy that the proposed acquisition would be contrary to the national interest,” he said.

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