Sanlu Group

Soft-drink firm considers bid for Sanlu

PUBLISHED : Tuesday, 14 October, 2008, 12:00am
UPDATED : Tuesday, 14 October, 2008, 12:00am


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The mainland's biggest soft-drink maker, the Hangzhou Wahaha Group, says it has submitted a letter of interest in buying the troubled Sanlu Group, whose products triggered the industry-wide milk contamination scandal.

The move makes Wahaha the first company to publicly voice interest in Sanlu, though several mid-sized mainland dairy firms have started positioning themselves to take over the former dairy giant.

Wahaha has received much publicity for its ongoing business dispute with estranged partner Groupe Danone.

Last month, a 'relevant government department' asked another dairy company, Beijing Sanyuan Foods, to look into 'an acquisition' as a way to protect dairy farmers' interests. The target of that acquisition was widely believed to be Sanlu, but an industry source said talks between Sanyuan and Sanlu were close to collapse and at least three other regional diary companies had expressed interest in buying Sanlu assets cheaply.

Wahaha chairman Zong Qinghou said growing demand for domestically produced milk was the major reason for its interest in buying Sanlu but the company had not had a response from the dairy firm.

'Wahaha is interested in Sanlu's net assets, so we hope not to be involved [in Sanlu's legal cases and compensation for affected babies],' Mr Zong said.

There are reports that Sanlu could face a compensation bill of at least 700 million yuan (HK$796 million) for the affected babies, who fell ill after drinking melamine-laced milk formula.