Bega Cheese is firming as a strong Australian alternative to acquire Lion’s dairy and drinks business after Treasurer Josh Frydenberg blocked a Chinese takeover of the company on national interest grounds.

A domestic contender would fit neatly into the Morrison government’s post-COVID-19 focus on trying to encourage more local manufacturing in areas where Australia has a natural advantage – such as making greater use of its plentiful, high quality food and dairy supplies. Some Australian super funds are also believed to be interested in investment prospects while other private equity or corporate bidders are also possible.