Sanyuan succeeds at buying Sanlu at auction

Beijing-based dairy producer Sanyuan has successfully acquired Sanlu Group, the dairy firm at the centre of last year's milk contamination scandal, in an auction.

Sanyuan acquired the company for RMB616.5 million.

Sanlu was declared bankrupt on February 12 after failing to pay outstanding debts which exceeded its assets.

The auction begun at RMB6 million, based on the valuation of Sanlu Group's core assets, including land use rights, buildings, machinery and equipment as well as subsidiary Linhe Dairy.

Sanyuan bid against just one other prospective buyer during the auction, which was open only to domestic dairy producers. The auction required bidders to have no involvement in the melamine scandal and the total revenue of their liquid milk and milk powder products last year should reach RMB1 billion.

Sanlu had been China's leading milk powder seller for 15 years until the melamine scandal broke in September last year. The Group's revenue hit RMB10 billion in 2007, while Sanyuan's revenue was RMB1 billion.

US$1 = RMB6.8423 (Mar 4)