(Bloomberg) -- Kirin Holdings Co.’s sale of its Australian dairy unit has attracted interest from China’s top milk producer and Canadian rival Saputo Inc., people with knowledge of the matter said.

Inner Mongolia Yili Industrial Group Co., China’s biggest dairy company, and Saputo have each spoken with investment banks about exploring potential offers for the Lion Dairy & Drinks Pty business, the people said. Kirin has asked for first-round bids by late November, said the people, who asked not to be identified because the information is private.

The unit of the Japanese beermaker could fetch about A$2 billion ($1.4 billion), the people said. Lion Dairy, which makes “Big M” flavored milk and “Dare” iced coffee, could also draw interest from other beverage companies including Australia’s Coca-Cola Amatil Ltd., according to the people.

Japan’s second-largest brewer has been narrowing its business scope to improve profitability amid a slump in beer consumption in its home market, where it’s also seeking to attract drinkers with higher-margin craft brews. Kirin started the sale process for Lion Dairy after a monthlong strategic review, it said in an Oct. 10 filing.

Saputo completed its acquisition of Australia dairy producer Murray Goulburn Co-operative Co. in April. Deliberations about potential bids are at an early stage, and the companies could decide not to submit offers, the people said.

Representatives for Kirin, Saputo and Coca-Cola Amatil declined to comment, while a representative for Yili didn’t immediately respond to a request for comment.

Kirin bought the dairy and beverage business in 2007 for an enterprise value of about $2.6 billion, according to data compiled by Bloomberg. The unit buys about 1 billion liters of milk annually from more than 550 Australian dairy farmers and crushes about 75,000 metric tons of fruit from orchards across the country, its website shows.

--With assistance from Angus Whitley, Lisa Du and Rachel Chang.

To contact the reporter on this story: Vinicy Chan in Hong Kong at vchan91@bloomberg.net

To contact the editors responsible for this story: Ben Scent at bscent@bloomberg.net, Timothy Sifert

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