The Berri factory, as it is colloquially known around town, will be sold by current owner Lion Dairy and Drinks to China's Mengniu Dairy Company Limited (Mengniu Dairy), subject to approval from the ACCC and Foreign Investment Review Board.

The announcement was made on Monday morning and comes after Lion Dairy and Drinks announced in August it would be cutting four jobs from the Leeton plant, as well as reducing the amount of grower contracts it accepts.

The Lion Dairy and Drinks Company will be sold as a whole to Mengniu Dairy for $600 million.

Lion chief executive officer Stuart Irvine said the sale includes all white milk, milk-based beverages, yoghurt, juice and water ice brands and assets.

It also includes Lion Dairy and Drinks' International business, and Dairy and Drinks' share of the joint ventures Vitasoy Australia Products and Capitol Chilled Foods Australia and Dairy & Drinks' licensing agreement for the Yoplait brand.

"When we announced the decision to sell the Dairy and Drinks business last year, we made clear our intention to identify the best future ownership arrangements for the Dairy and Drinks business," Mr Irvine said.

"Our aim throughout has been to ensure that both Dairy and Drinks and the Lion business are ideally positioned for growth - with the right people, assets and investment behind their respective strategies.

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"We believe Mengniu Dairy, a specialty dairy player, is an ideal owner to take Dairy and Drinks forward, given its track record of investing in the Australian dairy industry, together with its global reach and deep capabilities."

Mengniu Dairy chief executive officer Jeffrey Minfang Lu said the proposed acquisition will deliver significant benefits, while providing "real opportunities for Australian dairy farmers, fruit growers and regional communities".

"This ... brings together the best of the East and West, harnessing Mengniu Dairy's networks in existing markets and Dairy and Drinks' leading brands and production capability," he said.

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