Lion agrees to $600 million sale to China Mengniu Dairy

The future of 50 jobs at a Tasmanian manufacturing plant is under a cloud after the announcement of a major Chinese dairy buyout deal.

Some of the products produced at Lion Dairy & Drinks’ Lenah Valley factory.

A TASMANIAN dairy manufacturing factory will be included in proposed sale of Lion Dairy & Drinks to the China Mengniu Dairy Company.

Kirin Holdings and Lion have agreed to sell the business in a $600 million deal that will include the company’s Lenah Valley processing factory in Tasmania’s south.

Lion chief executive officer Stuart Irvine said the sale would include all white milk, milk-based beverages, yoghurt, juice and water ice brands and assets.

The proposed sale will 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.

There is now uncertainty over the future of the company’s Lenah Valley factory, which employs 50 people.

Products manufactured there include a range of popular milk and milk-based products, including Pura white milk and cream and Dare and Farmers Union Iced Coffee.

Fresh milk is currently supplied to the company by 10 Tasmanian dairy farms.

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A Lion spokesperson said once the sale has been completed, it will be up to Mengniu Dairy to determine the brands and products available within the portfolio.

“But there is no change as a result of this announcement to our current portfolio,” the spokesperson said.

“Ensuring continuity of milk supply, upholding our contracts with our dairy farmers and service to our customers are priorities for Lion Dairy & Drinks as we work through the sale process.”

The sale will be subject to Australian Competition and Consumer Commission and Foreign Investment Review Board approvals and other standard closing conditions.

It comes after the recent sale of the company’s Burnie cheese factory to Canadian dairy giant Saputo for $280 million.

Once completed, Mr Irvine said this latest proposed sale would 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,” he said.

“We believe that Mengniu Dairy, a specialty dairy player, is an ideal owner to take Dairy & Drinks forward, given its track record of investing in the Australian dairy industry, together with its global reach and deep 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.”

Mr Irvine said the company was confident today’s announcement best positions both Lion and the Dairy & Drinks business to move forward and reach their full potential in the years ahead.

Originally published as Lion agrees to $600 million sale to China Mengniu Dairy