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Two dairies set to snap up Sanlu

By Tuo Yannan (China Daily)
Updated: 2008-11-06 09:49

The long-drawn takeover of troubled dairy firm Sanlu will see two contenders splitting the Hebei province-based company's assets between themselves.

Beijing's Sanyuan is set to acquire seven milk production facilities in Hebei province, while Heilongjiang province-based Wondersun is expected to buy Sanlu's factory in the northeastern region, the 21st Century Business Herald reported.

None of three dairies could be reached for comment.

Sanyuan's shares were suspended from trading on September 26.

Since then, the firm has twice requested continued suspension. It disclosed for the first time in its October 28 suspension request that it was in talks that could lead to the acquisition of Sanlu's assets.

Sanlu has been the target of takeovers by various dairies and beverage manufacturers since news of a nationwide tainted-milk scandal involving its products broke in September. Sanyuan was among the first batch of those gunning for the beleaguered dairy and was widely tipped to be the front-runner in the takeover bid. Talks between Sanyuan and Sanlu were reported to have broken down last month over disagreements that included debts.

Sanlu's 2007 revenue, at 10 billion yuan ($1.46 billion), was about 10 times larger than that of Sanyuan's. Sanlu's total assets also amounted to 1.62 billion yuan as of end 2007, compared with Sanyuan's 1.32 billion yuan.