The competition regulator will review the proposed $600 million sale of Lion’s dairy and drinks business to China Mengniu Dairy, with a close eye on whether the deal generates competition concerns and on how the acquisition would affect Victorian dairy farmers.
The Australian Competition and Consumer Commission said the two parties overlapped in the acquisition of milk from farms in the Gippsland region of Victoria, one of the country’s most productive dairying regions.
The ACCC has asked interested parties to come forward to outline any “competition concerns” stemming from the deal. It is also seeking views on the potential impact of the deal on prices paid to Gippsland dairy farmers for their milk, and on the terms of their supply arrangements.
Mengniu has significant ties with South Gippsland-based dairy processor Burra Foods. A Mengniu subsidiary owns a 43.35 per cent minority stake in a company called Inner Mongolia Fuuyuan International Industrial, which in turn owns 51.35 per cent of Burra Foods.
Lion owns a yoghurt processing plant at Morwell, about 75 kilometres away from Burra’s plant at Korumburra.
Mengniu grabbed headlines in late November when the $600 million deal was announced, especially given it came shortly after it received a conditional tick of approval from federal treasurer Josh Frydenberg to buy infant formula company Bellamy’s Organic.
Lion owns well-known dairy brands including Dairy Farmers, Farmers Union, Dare and Big M.
“Lion Dairy and Drinks will provide information as relevant to the ACCC to assist their understanding and consideration of the transaction. We reiterate our view that the sale of the Dairy and Drinks business to Mengniu Dairy is in the long-term interest of all stakeholders,” Lion said in a statement.
Source: Thanks smh.com