More on possible San Lu ‘takeover’

Scoopit!

Thanks to Homepaddock Adam is aware that his report yesterday from Singapore on the likely takeover of San Lu was correct.

To the best of Adam’s knowledge that may mean Adam was the first to report this in NZ, then again maybe not. Would be fun though to have a scoop in NZ terms.

NZPA reports at 3 News. NZ Herald carries the story here,and Stuff here; interestingly it does not appear to be on the TVNZ site, yet. Quel surprise!

Fonterra’s disastrous joint venture in China, Sanlu, may be sold from under it to a Chinese rival, Beijing Sanyuan Food Co, according to media reports in Beijing.

Sanlu group may be forced into bankruptcy and taken over by Sanyuan, the China Daily reported.

Just as Adam reported yesterday.

Fonterra, the world’s biggest dairy trader, owns 43 percent of Shijiazhuang Sanlu Group Co., but to day told the Wall Street Journal that it hasn’t been approached about selling its stake.

“No one has contacted our people on the board about a purchase,” Fonterra chief executive Andrew Ferrier said.

So nobody is talking to Fonterra. Andrew Ferrier might want to think about why that might be.

The Chinese Government has shut down production at Sanlu and all products have been recalled after its baby formula was found contaminated with melamine, leading to the deaths of four infants.

Another 53,000 children — many of whom were drinking Sanlu milkpowders — have fallen ill with various urinary problems and 13,000 infants are still being treated in hospitals.

Fonterra has poured about $200 million into Sanlu since paying $150 for it initial stake in December 2005.

But this week it wrote wrote down the investment’s book value by $139 million leaving it worth only about $62 million after Mr Ferrier said the San Lu brand could not be re-constructed.

Shares of Shanghai-listed Beijing Sanyuan Food, a major dairy producer, were suspended on Friday as it reportedly received a government notice to consider a Sanlu merger plan.

Does not seem as there is much choice afforded anyone in this deal.

The suspension will continue until a decision is made, according to a company announcement.

A Sanyuan official, who refused to give her name, confirmed to the China Daily the company’s acquisition plans.

Sanyuan has emerged untainted in the recent milk scandal. As a result, its share prices have soared and sales skyrocketed.

Adam asks:-

Q:- Has Fonterra been involved in the discussions?

A:- It would appear not.

Q:- Does Fonterra and/or the NZ Government know what is going on here?

A:- Well Fonterra says it does not, but does the government?

Q:- Given provisions in the NZ-China FTA on property rights and Fonterra saying they know nothing, is this a sale or an effective sesquestration to enable achievement of state objectives?

A:- It looks like a sesquestration until we know what is going on

Q:- Will the NZ Government pressure Fonterra to agree to whatever is offered?

A:- Expect so