China Mengniu Dairy Co. andKirin Holdings Co. terminated their agreement for the purchase of the Japanese company’s Australian beverage unit amid strained relations between Sydney and Beijing.
The announcement comes just days after the Australian Financial Review reported that Australian Treasurer Josh Frydenberg was planning to block the deal, despite Foreign Investment Review Board advice that it should be approved.
The companiesreached a deal last year for the Chinese dairy giant to buy Kirin’s Lion Dairy & Drinks business for about 45.6 billion yen ($430 million).
The companies said in separate statements that they agreed to end the deal as it hadn’t received regulatory approval.
The scrapped deal is being viewed in local media through the prism of strained diplomatic ties between Australia and China.
Relations between the two countries have been fraught since the government in Canberra barred Huawei Technologies Co. from participating in Australia’s 5G network. China also responded angrily after Australia’s push for an independent inquiry into the origins of the Covid-19 outbreak.
China has started an anti-dumping investigation into Australian wine, halted some beef imports and placed tariffs on Australia’s barley exports after the conclusion of an earlier anti-dumping probe. It has also cautioned its citizens against studying in or holidaying in Australia.
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