SanLu might be acquired by SanYuan!

SanLu might be acquired by SanYuan!
Sep 26, 2008 22:05
JIMMYB Points: Join Date: Feb 7, 2007 Status: offline	Tainted milk powder scandal has caused great losses to SanLu. SanLu estimates that it will recall about 10 thousand tons of tainted milk powder and it will pay more than 700 million yuan to the consumers. On the other hand, it need to pay the medical expenditure for all victims' family. Now Sanlu has used all its active capital to pay reparation for the consumers. What does this mean? SanLu will probably go bankrupt very soon. Except bankruptcy, Sanlu has another way to go---acquisition. It is said that Beijing SanYuan dairy company is very likely to acquire SanLu. Yesterday, SanYuan made an announcement that it had suspended trading its shares. The market believes that SanYuan just make preparations to acquire SanLu. And SanYuan said that there was indeed an acquisition case. As for details, SanYuan refused to give details about the acquisition. Probably, SanYuan will acquire SanLu very soon. SanLu's tainted milk powder scandal not only caused great losses to itself but also to its cooperator---Fonterra, New Zealand's dairy giant. Fonterra wrote down the value of its stake in Sanlu by 69 percent. What's more, Denmark's dairy giant Arla Foods was also involved in Meng Niu's tainted milk powder incident. It is said that Arla Foods has been required to stop producing milk powder. I guess that those foreign invested companies will consider more carefully when they cooperate with Chinese dairy companies. Maybe, they will change their strategies. To cooperate with Chinese dairy companies might become their second choice in the future.

Sep 26, 2008 22:05

JIMMYB
Points:
Join Date: Feb 7, 2007
Status: offline

Tainted milk powder scandal has caused great losses to SanLu. SanLu estimates that it will recall about 10 thousand tons of tainted milk powder and it will pay more than 700 million yuan to the consumers. On the other hand, it need to pay the medical expenditure for all victims' family. Now Sanlu has used all its active capital to pay reparation for the consumers. What does this mean? SanLu will probably go bankrupt very soon.

Except bankruptcy, Sanlu has another way to go---acquisition. It is said that Beijing SanYuan dairy company is very likely to acquire SanLu. Yesterday, SanYuan made an announcement that it had suspended trading its shares. The market believes that SanYuan just make preparations to acquire SanLu. And SanYuan said that there was indeed an acquisition case. As for details, SanYuan refused to give details about the acquisition. Probably, SanYuan will acquire SanLu very soon.

SanLu's tainted milk powder scandal not only caused great losses to itself but also to its cooperator---Fonterra, New Zealand's dairy giant. Fonterra wrote down the value of its stake in Sanlu by 69 percent. What's more, Denmark's dairy giant Arla Foods was also involved in Meng Niu's tainted milk powder incident. It is said that Arla Foods has been required to stop producing milk powder.

I guess that those foreign invested companies will consider more carefully when they cooperate with Chinese dairy companies. Maybe, they will change their strategies. To cooperate with Chinese dairy companies might become their second choice in the future.

Oct 5, 2008 23:07	#1
YVONNE Points: Join Date: Nov 29, 2004 Status: Offline	This is the only way out for San Lu. Acquisition is better than bankruptcy.

Oct 10, 2008 15:20	#2
ERENCIUS Points: Join Date: Aug 26, 2007 Status: Offline	Well after what happened, I wonder how the buying company will value its acquisition on the image aspect. Anyway I guess the bride is very well endowed though looking ugly :-p.

Oct 11, 2008 21:15	#3
JIMMYB Points: Join Date: Feb 7, 2007 Status: Offline	Anyway I guess the bride is very well endowed though looking ugly :-p. You are right, Erencius. As for San Lu brand, I think it will disappear after it is acquired by San Yuan. In most people's mind, San Lu has become very notorious. No matter whatever San Lu does, it is too late and useless. Otherwise, there is no need to let Sanyuan acquire Sanlu. San Lu is already dead.

Oct 12, 2008 21:04

JIMMYB
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Join Date: Feb 7, 2007
Status: Offline

Update:

San Yuan has trouble in acquire San Lu because it doesn't have enough money. Meanwhile, the other two companies also intend to buy San Lu. One is Fei He dairy company and the other is Wahaha Group Co.. Zong Qinhou, the head of Wahaha Group Co., said that Wahaha will consider to produce its own infant formula milk powder no matter it can acquire San Lu or not. Wahaha has built 5 milk production lines in Xinjiang, Yunnan, Ningxia, Heilongjiang and Jilin.

Not only San Lu but also some other big dairy giants including Meng Niu, Yi Li and Guangming have been involved in the contaminated milk powder scandal and they have suffered great losses. However, those small dairy companies that haven't been involved in this scandal are taking this opportunity to expand their market shares. Hopefully, this milk scandal will help China to restructure China's dairy market and break some dairy giants' monopoly.

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