Business Intelligence on Retailing, Franchising, and Consumerism in China

Beijing's Sanyuan To Rent Sanlu Assets

Following confirmation of milk producer Sanlu's bankruptcy, Beijing-based rival Sanyuan has adjusted its acquisition plan and announced that it will rent some of Sanlu's assets.

Sanyuan stated that it originally planned to acquire parts of Sanlu's assets and businesses. However, since Sanlu had received a bankruptcy order from the Intermediate People's Court of Shijiazhuang, the board of directors of Sanyuan decided to revise its acquisition plan.

According to the revised plan, Sanyuan approved its wholly-owned subsidiary Hebei Sanyuan Foods to rent part of Sanlu's assets before these assets were entered into the bankruptcy process.

An insider from Sanlu told local media that Sanyuan had already entered Sanlu with the leasing model, but it did not report it until recently. Currently a Sanlu dairy plant rented by Sanyuan has re-started production on a small scale.

China's milk industry was rocked in 2008 when melamine was found in dozens of products created by many milk producers. Some companies like Sanlu found it hard to operate after the scandal was revealed, causing them to lose clients and revenue.

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