Kirin in talks with potential buyers for its dairy business

Australia has a world class reputation for high quality, clean and green food products. To Chinese investors this is particularly attractive, as food safety is a perennial concern for consumers amidst scandals related to health concerns in recent years. The growing middle class is willing and able to pay a premium for peace of mind.

No surprise, therefore, that Kirin's sale of its Australian dairy and juice unit has attracted interest from China's top milk producer as well as Canadian rival Saputo, media said.

Inner Mongolia Yili Industrial Group, which is reportedly China's biggest dairy company, and Saputo are said to have sniffed around and have spoken with investment banks about exploring potential offers.

Rumour has it that Kirin has asked for first-round bids by late November. The dairy and juice unit of Kirin's Australian subsidiary Lion - a brewer - could fetch about AUD 2 billion (USD 1.45 billion).

The Canadian dairy firm Saputo, which was founded by Italian immigrants and ranks among the world's top 10 dairy businesses, completed its acquisition of Australian dairy producer Murray Goulburn Co-operative in April this year. It could be looking for bolt-on acquisitions.

Kirin bought the dairy and beverage business in 2007 for about USD 2.6 billion. The unit processes about 1 billion litres of milk annually from more than 550 dairy farmers and crushes about 75,000 metric tons of fruit from orchards across the country, its website shows.