Chinese dairy products manufacturing firm China Mengniu Dairy has just made its second-largest acquisition in Australia this year. The Chinese company has reportedly agreed to acquire Kirin Holding's milk-based beverage unit in Australia for $419 million.
Kirin Holdings, currently Japan's second-largest brewing company, agreed to sell Mengniu its entire line of milk, juice, and yogurt products under its Lion Dairy & Drinks brand in Australia. According to a statement released by Kirin on Monday, the company will still retain its control of its beer, spirits, and wine businesses in the continent. Mengniu's deal with Kirin and the full acquisition of the Lion Dairy & Drinks brand is expected to close in the first half of next year.
The sale of its Lion Dairy & Drinks business in Australia is the latest move by the Japanese brewer to shift its operational focus to its more profitable units. The company initially announced that it was planning to sell its Australian drinks business last year. The decision was preceded by the company's sale of its Australian cheese business to Canadian company Sapunto Inc.
Kirin has repeatedly mentioned that the purpose of its asset sales has been to renew its focus on its high-margin alcoholic beverage and premium non-alcoholic drinks businesses. Kirin also stated that it plans to enter other related industries to expand its portfolio.
Reports citing sources with knowledge of the matter have revealed that Kirin is planning to make major investments in various industries including craft beer, personal well-being, health drinks, and organic skincare. Last week, Kirin had reached an agreement to buy independent brewery New Belgium Brewing for an undisclosed amount. The acquisition was part of the company's new global strategy to shift its operations into more lucrative businesses.
The acquisition of Lion Dairy & Drinks in Australia is Mengniu's second major acquisition in the continent for the year. In September, Mengniu signed a $1 billion deal to fully acquire organic infant formula manufacturer Bellamy's Australia Ltd. The acquisition was meant to secure the company's position in the fastest-growing segment in the entire Australian dairy market.
Mengniu's aggressive international expansion has managed to restore confidence in China's dairy industry, which was previously hit by a major milk scandal in 2008. The industry was devastated by the scandal, which resulted in the deaths of six children. Following the scandal, China's government has been trying to revitalize the industry with the imposition of measures that supported overseas expansions, while at the same time tightening regulations.
