Milk factory in dairy sale
A TASMANIAN dairy manufacturing factory will be included in a 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 Hobart. Lion chief executive officer Stuart Irvine said the sale will include all white milk, milk-based beverages, yoghurt, juice and water ice brands and assets.
Mengniu Dairy recently bought Tasmanian based Bellamy’s Organic for $1.5 billion.
The proposed new sale will also include 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 supplied to the company by 10 Tasmanian dairy farms.
A spokesperson from Lion 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.
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 will represent a full divestment of the Dairy & Drinks business.
“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,” he said.