(Adds background on Lion; Kirin, Lion statement) Nov 26...

(Adds background on Lion; Kirin, Lion statement)

Nov 26 (Reuters) - Australia's Bega Cheese Ltd (BGA) said on Thursday it will buy the local dairy assets of Japanese drinks giant Kirin Holdings Co Ltd 2503.T for A$560 million ($412 million) to drive consolidation in Australia's fragmented dairy industry.

Australia's top cheesemaker plans to raise A$401 million in equity to fund the purchase of Kirin's Lion Dairy & Drinks, the company said.

The sale brings to an end a two-year struggle by Kirin to offload Lion as part of a broader push to divest underperforming overseas assets and move into health and cosmetics.

Kirin was forced to scrap an initial plan in August to sell the assets to China Mengniu Dairy Co Ltd 2319.HK for A$600 million, following changes to Australia's foreign investment laws and fraying relations between Beijing and Canberra.

Lion has about 6% of the fragmented Australian dairy market, according to industry researcher IBISWorld, and would support Bega Cheese's plans of turning into a local food giant.

"The acquisition delivers important industry consolidation," Bega Cheese's Chairman Barry Irvin said in a statement.

Stripping away separation costs, Bega Cheese says the net deal value for brands including Farmers Union yoghurt, Berri juice and Zooper Dooper ice blocks, is A$534 million.

Kirin and Lion, in separate releases, confirmed the sale, adding that it was unconditional and expected to complete in early 2021. ($1 = 1.3580 Australian dollars)