 Wahaha enters bid for Sanlu
By Tuo Yannan (China Daily)
Updated: 2008-10-14 08:07 Wahaha, the beverage company based in Hangzhou, capital of Zhejiang province, has emerged as the latest bidder for the scandal-hit dairy company, Sanlu Group. Zong Qinghou, CEO of Wahaha, said in an interview on Saturday that his company made an offer to acquire the beleaguered Hebei-based group. Zong did not mention the price of Wahaha's bid or disclose details of the move, but said that even if the proposed acquisition materializes, the drinks company would go into the dairy business by building its own facilities to make powdered milk. A spokesman for Wahaha confirmed his company's intention to bid for Sanlu but did not provide further details. Two other dairy companies, Beijing Sanyuan Food and Wondersun Dairy, have reportedly offered to buy Sanlu, which was at the center of a tainted-milk scandal that broke several weeks ago. In an earlier interview, Zong was quoted as saying that Sanlu's production equipment, raw milk sourcing channels and skilled workers would "complement" Wahaha's plan to expand into the dairy industry. He also said that he would not introduce major changes in Sanlu if the acquisition is successful. Wahaha is already said to have entered the dairy industry on a limited scale. Its YoYo brand of milk tea was made from imported milk powder. But the rapidly escalating price of imported materials since last year reportedly forced the company to begin using materials from domestic suppliers. The Sanlu offer was made at a time when talks between Sanyuan - which was earlier tipped to be the most likely merger candidate - and Sanlu reportedly hit snags. Sanlu's sales revenue was 10 billion yuan last year, about 10 times larger than that of Sanyuan's 1.1 billion yuan. At the end of last year, the total assets of Sanlu were 1.62 billion yuan, compared to Sanyuan's 1.32 billion yuan. The two companies also differ in aspects such as customer base, management style and marketing strategy, making integration difficult, analysts have said. According to Zong, Wahaha has built five milk powder production lines in the Xinjiang Uygur and Ningxia Hui autonomous regions, as well as in Yunnan, Heilongjiang and Jilin provinces. Dairy production in Xinjiang has reportedly started, while the milk powder production line at its Ningxia factory will be put into use soon. (China Daily 10/14/2008 page14) |
