China Mengniu Dairy Company offered to buy Lion Dairy & Drinks from Kirin Holdings in November last year in a deal worth A$600 million (US$434 million).

Australia will not approve China Mengniu Dairy Company’s proposed buyout of some of Australia’s best-known milk brands from Japan’s Kirin Holdings, the Australian Financial Review reported on Thursday.

Australia Treasurer Josh Frydenberg has gone against the advice of the Foreign Investment Review Board (FIRB) which was to approve the A$600 million (US$434 million) deal, the report said, citing unidentified sources.

China Mengniu Dairy Company offered to buy Lion Dairy & Drinks from Kirin Holdings in November last year.

Australia in June announced the biggest shake-up of its foreign investment laws in almost half a century, 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 government does not comment on the details of foreign investment screening arrangements as they apply, or could apply, to particular cases
Josh Frydenberg

The law also empowers the government to force the sale of a business if it deems it a national security risk.

“The government does not comment on the details of foreign investment screening arrangements as they apply, or could apply, to particular cases,” Frydenberg said in an emailed response.

Diplomatic relations between China and Australia have soured after Canberra called earlier this year for an independent inquiry into the origins of the coronavirus and criticised a new security law in Hong Kong.

China has recently imposed import tariffs on Australian barley, suspended some beef imports and advised Chinese students and tourists to avoid travelling to Australia, citing racial discrimination.

On Tuesday, China launched an anti-dumping probe into imports of Australian wine.