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Mengniu's Acquisition of Aussie Dairy Giants Shows Complementarity

25 November 2019

CHINA - China's Mengniu Dairy on Monday reached an A$600 million ($407 million) deal to acquire a third Australian drinks brand. The company announced its newest purchase following the acquisitions of Australian dairy companies Burra foods and Bellamy's Organic.

Analysts said the merger can bring the complementary advantages of the Chinese and Australian dairy sectors into full play.

Mengniu signed a deal on Sunday to buy 100 percent of Lion - Dairy & Drinks, an Australian company specializing in dairy products and beverages, the company announced on Monday in a disclosure to Hong Kong Exchanges and Clearing.

The Chinese company acquired Bellamy's, an Australian organic infant milk powder and auxiliary food brand, in September.

Through its merger with Lion, Mengniu will integrate Bellamy's, Burra and other Australian businesses to form a cluster worth about 10 billion yuan ($1.42 billion). It is expected to become the largest dairy enterprise in Australia, according to industry insiders.

Bai Ming, a research fellow at the Chinese Academy of International Trade and Economic Cooperation, said that China and Australia are actually upstream and downstream on the dairy industrial chain.

"Australia is upstream, providing the means of production such as dairy products, wool and minerals, while China is downstream, with manufacturing and direct consumption. With the cooperation of the two sides, Australia has obtained a stable and huge market, and China has obtained a stable supply. China and Australia have formed a community of shared interests and reduced common risks," Bai said.

China has become the world's largest importer and net exporter of dairy products, dairy cattle and herbage to feed animal, and the world's largest dairy emerging market, according to a white paper on China's dairy industry released in July 2019.

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Source: Global Times

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