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Scandal-ridden Sanlu in discussions over sale

By Tuo Yannan (China Daily)
Updated: 2008-10-18 13:30

A close-door meeting was held on Friday at the Ministry of Industry and Information Technology between officials and representatives of at least four domestic and one foreign dairy and beverage producers to discuss issues relating to the takeover and restructuring of the scandal-ridden Sanlu Group.

The five potential bidders for Sanlu included Yili of Inner Mongolia, Sanyuan Foods of Beijing, Wahaha of Hangzhou, Wondersun Dairy of Heilongjiang and US firm Firmus Dairy. A Beijing newspaper reported that Mengniu Dairy, of Inner Mongolia, was also represented at the meeting. Calls to Mengniu's Beijing office, however, were not returned.

Industry insiders said one of the main issues discussed in the meeting involved compensation to victims of the tainted milk produced by Sanlu. Because of the large number affected, the compensation scheme would not only be costly, but also complex, experts said.

"Settlement programs will be vital to the restructuring of Sanlu," Wang Dingmian, executive director of the Dairy Association of China, was quoted as saying by the local media. He could not be reached for comments on Friday.

Wondersun's CEO Liu Qingquan said in an early report that he expected the negotiations to take over Sanlu to last at least six months. Industry experts surmised that the likely outcome would be the breaking-up of Sanlu and selling to pieces of its business to different dairy producers.

Earlier, Sanyuan emerged as the most possible candidate to merge with Sanlu. But negotiations between the two companies had reportedly ground to a halt because of unresolved issues.