Lion dairy business includes brands like Pura milk

Lion dairy business includes brands like Pura milk

Stuart Irvine, chief executive of Australian food and drink group Lion, has played down speculation the company's dairy processing business could be sold.

Irvine insisted Lion's recent investment in takeover target Warrnambool Cheese and Butter Factory was an indication of the company's "commitment" to dairy.

Lion, owned by Japanese food and drink group Kirin Holdings, is one of Australia's largest beverage alcohol businesses, with brands including Steinlager beer.

However, speculation has emerged in Australia Lion has been looking to sell its dairy arm, which has seen sales come under pressure in recent quarters.

According to The Australian, citing an unnamed source, Lion approached Fonterra about a potential deal in recent months but the New Zealand dairy giant was uninterested.

However, speculation has persisted over the future of Lion's dairy arm, which owns brands including Pura milk and holds the local licence for Yoplait yoghurt.

Speaking at the opening of a new brewery, Irvine reportedly ruled out selling the assets.

"I think the stake that you've seen in WCB is a demonstration of our commitment towards our future plans," Irvine told reporters, according to The Australian.

In October, Lion snapped up 9.99% of WCB as takeover interest in the business intensified. WCB produces cheese for Lion, which analysts claimed, was seeking to protect its position in the event of a takeover.

Irvine said: "We already have a relationship with them in everyday cheese, and that means that we've taken a seat at the table so that the relations we currently have are looked after during any potential transfer of ownership."

There are three bids on the table for WCB, with Australian dairy processors Murray Goulburn and Bega Cheese, plus Canada's Saputo, all making offers.

Lion's dairy business came together in a flurry of acquisition activity between 2007 and 2009. Kirin, which already owned 46% of the then Lion Nathan, snapped up Australian dairy group National Foods in 2007. A year later, it bought another Australian firm Dairy Farmers.

In 2009, Kirin purchased the rest of Lion Nathan. Two years later, it renamed its Lion Nathan National Foods division as Lion. The business has struggled amid discounting in Australia's dairy sector.