On Tuesday, Kirin Holdings Co and China Mengniu Dairy Co said that they have called-out their deal on the sale of the Japanese company's wholly-owned Australian dairy firm Lion-Dairy and Drinks Pty Ltd to the Chinese company. This statement comes after the Australian Financial Review, last week, reported that the Australian government had decided to block the sale.
The development is likely to increase strain on Chinese-Australian relations.
Treasurer Josh Frydenberg said he had advised the buyer China Mengniu Dairy Co. that the sale of the Japanese company's Australian subsidiary Lion Dairy and Drinks "would be contrary to the national interest."
"This follows the communication of my preliminary view to Mengniu Dairy that the proposed acquisition would be contrary to the national interest," he said. Frydenberg's statement did not elaborate on how the deal would damage Australia's interests.
On Tuesday, Kirin's statement said, "Lion notes that China Mengniu Dairy Company Limited has been awaiting the outcome of the Foreign Investment Review Board review of its proposed purchase of Lion Dairy & Drink."
"Given this approval is unlikely to be forthcoming at this time, Lion and Mengniu Dairy have mutually agreed to cease the current sale process. We are disappointed with this outcome and will now consider pathways forward in relation to the Lion Dairy & Drinks business," it added.
Lion owns several known brands including Dairy Farmers, Masters and Pura milk sold in Australia.
This comes a week after China launched an investigation into whether Australia is exporting wine at improperly low prices in a new dispute between major trading partners that could reduce access to the biggest market for Australian vintners. The anti-dumping investigation focuses on wine in containers 2 litres (68 fluid ounces) or smaller, which accounts for most Australian exports, the Chinese Ministry for Commerce said. It said the probe was prompted by a complaint from Chinese wine producers in July but gave no details.
The Australian government denied subsidizing exporters. A separate anti-dumping investigation closed the Chinese market to Australian barley in May through crippling tariffs after Australia supported calls for an investigation into the origins of the coronavirus pandemic.
The sale fell through Beijing also blocked imports of beef from Australia's four biggest abattoirs. Australian announced in March that it was tightening restrictions on foreign takeovers because of national security concerns raised by the pandemic.
With inputs from agencies