Trailer Magazine

China’s Mengniu Dairy discloses $600M acquisition

  • Posted on Monday 25th, November 2019.

Chinese manufacturing company, Mengniu Dairy, has entered an agreement to acquire Lion Dairy & Drinks for $600 million, subject to adjustments.

Lion’s alcohol businesses in Australia and New Zealand and its global Lion Little World Beverages business are not affected by the Dairy & Drinks sale process.

The sale, according to Lion CEO, Stuart Irvine, includes all white milk, milk-based beverages, yoghurt, juice and water ice brands and assets. It also includes Lion Dairy & Drinks’ International business, and Dairy & Drinks’ share of the joint ventures Vitasoy Australia Products and Capitol Chilled Foods Australia and Dairy & Drinks’ licensing agreement for the Yoplait brand.

The sale is subject to ACCC and Foreign Investment Review Board approvals and other standard closing conditions. Once completed, this sale, together with the sale of the specialty cheese business to Saputo Dairy Australia for $280 million (announced in April 2019 and finalised in October 2019), will represent a full divestment of the Dairy & Drinks business.

“When we announced the decision to sell the Dairy & Drinks business last year, we made clear our intention to identify the best future ownership arrangements for the Dairy & Drinks business," said Irvine.

"Our aim throughout has been to ensure that both Dairy & Drinks and the Lion business are ideally positioned for growth – with the right people, assets and investment behind their respective strategies.

“After reaching an agreement to sell the Specialty Cheese business to Saputo on a standalone basis, we took some time to carefully assess all options for the balance of the Dairy & Drinks business that would best deliver on our objectives," he said.

Irvine said Mengniu Dairy is an ideal owner to take Lion forward due to its track record of investing in the Australian dairy industry along with its global reach and capabilities.

"Bringing the businesses together will help drive Mengniu Dairy’s growth in the Australian domestic market, while also accelerating Dairy & Drinks’ aspirations in South East Asia and China," he said.

"In addition, Dairy & Drinks will benefit from access to leading-edge dairy research and development capability and further investment as part of the Mengniu business.

“The full divestment of the Dairy & Drinks business will ensure it has an owner that is well placed to grow the business over the long term, while also accelerating Lion’s pivot to becoming a leading global adult drinks business. We are very confident that today’s announcement [25 November 2019] best positions both Lion and the Dairy & Drinks business to move forward and reach their full potential in the years ahead."

Lion (part of the Target Group) has 13 manufacturing facilities across Australia and an extensive cold chain distribution network that services 35,000 customers.

Mengniu said in a statement that one of the benefits of the acquisition is to support high-end ultra-heat treatment (UHT) milk growth opportunities and synergies in the supply chain.

(Image: Lion Dairy & Drinks CEO, Stuart Irvine.)

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