Sanyuan Foods and the Chinese government are to jointly give scandal-plagued dairy firm Sanlu Group a capital injection, in a prelude to Sanyuan becoming a trustee of and eventually acquiring Sanlu, the South China Morning Post reported, citing an industry source. Sanyuan, which has suspended trading its own shares since September in expectation of a buyout of Sanlu, will reportedly raise funds on the mainland stock market. The amount of the injection was not mentioned. The source told the newspaper that Sanyuan would resume production of Sanlu dairy products under the Sanyuan brand name as part of a "trial run" while it estimates the value of the firm’s assets. New Zealand-based Fonterra Group has made tentative plans to fully write down its 43% stake in Sanlu, which was at the center of the melamine-contamination scandal that resulted in the deaths of four infants and illnesses in tens of thousands of others in China. Other major dairy firms Mengniu, Yili and Bright have suffered blows from positive tests for melamine in their products, while Sanyuan has been relatively untouched by the affair.
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