$600m Lion Dairy deal falls through amid rising China trade tensions

Lion Dairy and China Mengniu Dairy agreed to the mega-deal in November, however it required the approval of the Foreign Investment Review Board (FIRB).

In a statement, Lion Dairy made it clear the sale was not going ahead because it had failed to get the FIRB tick of approval.

"Given this approval is unlikely to be forthcoming at this time, Lion and Mengniu Dairy have mutually agreed to cease the current sale process," the company said.

"We are disappointed with this outcome and will now consider pathways forward in relation to the Lion Dairy & Drinks business."

Treasurer Josh Frydenberg, who has the final say on FIRB decisions, said he had told both parties his preliminary view of the proposed acquisition "would be contrary to the national interest".

In February, the Australian Competition and Consumer Commission gave its approval of the purchase.

However, Mr Frydenberg was reportedly reluctant to approval the deal, off the back of rising trade tensions with China.

The past few months, China has imposed a massive tariff on barely, banned exports from a number of meatworks due to "technical breaches" and recently announced an investigation in to the alleged dumping of Australian wine.