On Thursday, as per a report from the Australian Financial Review, Cannberra will not approve a proposed buyout of Australia’s best known milk brands from Japan’s Kirin Holdings Co Ltd by China Mengniu Dairy Co.
According to anonymous sources, the decision by Australia Treasurer Josh Frydenberg is against the advice of Australia’s Foreign Investment Review Board (FIRB) which could potentially approve the $431 million (A$600 million) deal.
In November 2019, China Mengniu Dairy Co had offered to acquire Lion Dairy & Drinks Pty Ltd from Japan’s Kirin Holdings Co Ltd.
In June 2020, Australia had announced the biggest shakeup of its foreign investment laws in nearly 50 years giving the treasurer last-resort powers to vary or impose conditions on a deal or force a divestment after it has been approved by FIRB.
The new law also empowers the government to force the sale of a business if it deems it as a national security risk.
Frydenberg declined to comment on the report.
“The government does not comment on the details of foreign investment screening arrangements as they apply, or could apply, to particular cases,” said Frydenberg.
Australia-China relations took a downward turn after
Diplomatic relations between China and Australia have soured after a call by Canberra for an independent inquiry into the origins of the Wuhan coronavirus. Australia also voiced its opposition to China imposing its draconian security law over Hong Kong.
Citing racial discrimination, in recent months, China has imposed import tariffs on Australian barley, and suspended some beef imports. It has also advised Chinese students and tourists to avoid travelling to the country.
On Tuesday, China launched an anti-dumping investigation into the import of Australian wine.