Sanyuan Gets A Great Deal, But Risks Remain

Beijing Sanyuan Group, one of a small number of Chinese dairy firms unaffected by late 2008's melamine scandal, has acquired the assets of disgraced former giant Sanlu Dairy at auction for CNY616mn (US$90.1mn). Sanyuan got a bargain price for the assets, and its shares (suspended since late September) soared on news of the deal. Products processed at Sanlu-owned plants have already reached supermarkets under the new ownership of Sanyuan, and CFW does not expect the scandal to cause irreparable damage to the high growth Chinese dairy sector, in spite of the scale of the scandal.

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