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Sanlu asset sales plan taking shape

A plan to sell the assets of the Chinese joint venture in which New Zealand farmers have invested about $200 million is taking shape.

The Beijing Review today reported moves to acquire several plants affiliated to Sanlu Group, the dairy products manufacturer at the centre of the chemically contaminated milk scandal .

Through its investment in Sanlu, Fonterra Cooperative Group effectively took a share of more than 40 affiliated plants that are interconnected. Fonterra holds 43 percent of the shares in Sanlu but has already written down $139 million worth of its investment's book value.

At least four babies died, and another 53,000 were made ill by adulterated Chinese milk powders containing melamine.

The Beijing Review said today that Sanlu expects to have to pay compensation claims totalling 700 million yuan ($NZ188 million) to consumers whose infants became sick or died after drinking its tainted baby formula.

Beijing-based Sanyuan Group is reportedly set to acquire Sanlu's seven key affiliate milk plants in Shijiazhuang, capital of Hebei Province.

The Wondersun Dairy Co Ltd, based in Heilongjiang Province in northeast China, is also expected to buy a plant in that province.

But details about the acquisitions and disposals of Sanlu's other factories around the country remain unclear.

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