SYDNEY • Australia may block China Mengniu Dairy from buying some of the country’s best-known milk brands, the Australian Financial Review reported yesterday, citing unidentified sources who blamed “diplomatic issues”.
Treasurer Josh Frydenberg went against the advice of the Foreign Investment Review Board (FIRB), which was in favour of approving the A$600 million (S$588 million) deal, the newspaper said.
That would mark the first government veto since Australia last month announced its biggest shake-up of foreign investment law in half a century, which gave the Treasurer last-resort power to vary or impose conditions on deals in the event of a national security risk.
The revision came partly in response to fear that the coronavirus pandemic’s economic impact would make buying strategic assets easier for cashed-up foreigners.
China Mengniu’s approach also came against a backdrop of rising bilateral tensions after Australia called for an international inquiry into the origins of the coronavirus, which was first reported in China.
China Mengniu offered to buy Lion Dairy & Drinks from Japan’s Kirin Holdings last November, 10 days after receiving the FIRB’s approval to buy infant formula maker Bellamy’s for A$1.43 billion. It gained approval for the Lion deal in February.
“The government does not comment on the details of foreign investment screening arrangements,” Mr Frydenberg said in response to questions.
Queensland Liberal National Party agriculture spokesman Tony Perrett had in March written to him about milk supply concerns with the Mengniu deal, stating “grave concern about major food processor brands being bought by Chinese firms with close ties to the Chinese government”.