China’s Mengniu Dairy Co. and Lion Dairy & Drinks, a large dairy company in Australia owned by Japan's Kirin Holdings, have mutually agreed to cease a $434 million sale after it became clear that the transaction would likely be denied by the Australian government.

Mengniu Dairy would have acquired Lion Dairy’s raw milk processing facilities in Australia, two of which are located in Chelsea and Morwell in Victoria.

The Australian Competition & Consumer Commission announced in February that it would not oppose the proposed acquisition, but Mengniu Dairy has been awaiting the outcome of a review by Australia’s Foreign Investment Review Board (FIRB).

However, recent trade tension between the two countries led the companies to forego the sale after Australia's treasurer Josh Frydenberg indicated that the sale was “contrary to the national interest.”

“We are disappointed with this outcome and will now consider pathways forward in relation to the Lion Dairy & Drinks business,” Lion Dairy said in statement.