Lion Dairy back up for sale after Frydenberg rejects Mengniu deal

Lion’s dairy business back on the block to test offers following the government’s rejection of a sale to China-based Mengniu.

Lion Dairy also produces Berri fruit juices

Lion Australia has put its dairy business back on the block to test offers for a quick sale, following the federal government’s rejection of the planned $600m sale to China-based Mengniu.

Lion has decided to test local interest to ensure a sale without triggering regulatory delays.

At least two parties have expressed interest including John Wylie’s Tanarra Capital and Bega Cheese, but other offers are expected.

A joint bid is possible, with some assets like flavoured milk attractive to the likes of Coca-Cola Amatil.

If no suitable offer is forthcoming in the short term the company will hang on to the asset under its highly-regarded boss Kathy Karabatsas.

The Lion Dairy assets include a cold storage distribution chain in service stations and corner stores, Berri fruit juices, Big M flavoured milk and fresh milk under the Pura name or house brand sales to supermarkets.

Federal Treasurer Josh Frydenberg told both Mengniu and Lion he was not keen on the sale on unexplained “food security grounds.”

This is despite the fact he cleared the $1.5bn Mengniu acquisition of Bellamy’s baby milk powder in November last year.