Australia to reject China-backed company's offer to buy dairy firm - media

SYDNEY, Aug 20 (Reuters) - Australia will not approve China Mengniu Dairy Co’s proposed buyout of some of Australia’s best-known milk brands from Japan’s Kirin Holdings Co Ltd, 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 ($431 million) deal, the report said, citing unidentified sources.

China Mengniu Dairy Co offered to buy Lion Dairy & Drinks Pty Ltd from Japan’s Kirin Holdings Co Ltd in November last year.

Australia in June announced the biggest shakeup 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 law also empowers the government to force the sale of a business if it deems it 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,” he 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 new 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.

$1 = 1.3926 Australian dollars Reporting by Renju Jose; Editing by Lincoln Feast.