Lion-Dairy and Drinks business produces and distributes milk and dairy beverages. Credit: Jagoda Kondratiuk on Unsplash.

Japanese beverage company Kirin Holdings is reportedly exploring new options to sell its Lion Dairy and Drinks business in Australia after the deal with China Mengniu Dairy was called off due to ‘diplomatic issues’.

Last month, Kirin Holdings and China Mengniu Dairy announced the termination of the deal involving the acquisition of Lion-Dairy and Drinks by the Chinese firm.

Citing undisclosed sources, Bloomberg reported that the Japanese firm has had beginner talks with investors who previously expressed interest in its Lion Dairy & Drinks

Potential bidders could explore buying parts of the Australian unit, which includes milk, yoghurt and juice products.

Sources familiar with the matter said that the investors are considering options to acquire parts of the Australian business, which offers products such as milk, yoghurt and juice.

Companies such as Asahi Group Holdings, Bega Cheese and Pacific Equity Partners had previously expressed their interests in acquiring Lion Dairy & Drinks.

However, Asahi Group Holdings, Bega Cheese and Pacific Equity Partners did not comment on the latest developments.

According to a representative, Kirin is also considering selling or retaining the business.

In September 2018, Kirin first expressed its intent to sell its dairy products and beverages business unit in Australia as part of its strategic review process.

Lion-Dairy and Drinks is engaged in the production and distribution of milk, dairy beverages, cheese, yoghurt, juice and soy.

Last November, Chinese dairy company Mengniu Dairy signed an agreement with Kirin Holdings and Lion to acquire the Lion Dairy & Drinks business in Australia for A$600m ($407m).

Under the deal, Mengniu Dairy agreed to acquire complete white milk, milk-based beverages, juice, yoghurt and water ice brands and assets.