Australian food manufacturer Bega Cheese is reportedly the front-runner to buy local peer Lion Dairy & Drinks.

The Australian Financial Review said today (20 November) Bega, one of Australia’s major dairy suppliers and home to the Vegemite spreads brand, is battling for Lion Dairy & Drinks with investment firm Tanarra Capital.

Saputo, the Canadian dairy giant, is no longer in the running after the three suitors tabled bids earlier this month to Lion Dairy & Drinks’ owner Kirin Holdings, the newspaper reported.

just-food could not reach Saputo, Bega, Tanarra and Lion Dairy & Drinks for comment outside of normal office hours.

Kirin reportedly restarted efforts to offload Lion Dairy & Drinks in September after a move to sell the business to China Mengniu Dairy Co. hit the buffers earlier this year.

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Last month, Saputo confirmed it was mulling a move to buy the owner of the Pura and Dairy Farmers brands. The company’s statement came after The Australian Competition & Consumer Commission invited interested parties to submit their views, disclosing that Saputo “proposes to acquire” Lion Dairy & Drinks from Japan’s Kirin Holdings.

Bega Cheese had indicated in August it could be interested in buying Lion Dairy & Drinks.

Those comments came days after Kirin and Mengniu agreed to scrap a deal they had agreed for Lion & Dairy Drinks last November. The proposed transaction had been given the green light by Australia’s competition regulator in February. However, amid increasingly strained relations between China and Australia, Kirin said in late August approval from Australia’s Foreign Investment Review Board was “unlikely to be forthcoming at this time”.

Last month, Australian dairy company Barambah Organics announced it had received investment from asset-management firm Tanarra Capital in exchange for an undisclosed stake.

The Australian Financial Review said today it understood Tanarra Capital’s offer for Lion Dairy & Drinks was part of a consortium with investment firm’s Hostplus and Sunsuper, as well as Australian investment office Kin Group.

Kirin launched a review of the business in autumn 2018, confirming that October it was looking to sell the asset. However, the following April, a deal for Lion Dairy & Drinks cheese unit was announced, with Saputo agreeing to buy brands including South Cape and King Island Dairy.