• By The Financial District


Australia’s government may block China Mengniu Dairy Co Ltd.’s purchase of some of the country’s best-known milk brands, the Australian Financial Review reported on Thursday, August 20, 2020, citing unidentified sources who blamed “diplomatic issues.”

Treasurer Josh Frydenberg has gone against the advice of the Foreign Investment Review Board (FIRB) which was in favor of approving the A$600 million ($430.98 million) deal, the newspaper said. That would mark the first government veto since Australia in July announced its biggest shake-up of foreign investment law in almost half a century. That gave the treasurer last-resort power to vary or impose conditions on deals even after FIRB approval, or force divestment in the event of a national security risk, Reuters also reported.

The revision came partly in response to fear that the economic impact of the COVID-19 pandemic would make buying strategic assets easier for cashed-up foreigners. The law does not mention any specific country of origin. China Mengniu’s approach, however, came against a backdrop of increasing Sino-Australia tension after Canberra called for an international inquiry into the origins of the novel coronavirus, which was first reported in China at the end of last year.

China Mengniu offered to buy Lion Dairy & Drinks Pty Ltd from Japan’s Kirin Holdings Co. Ltd. in November, just 10 days after receiving FIRB’s approval to buy infant formula maker Bellamy’s for A$1.43 billion. It gained approval from Australia’s competition regulator for the Lion deal in February.