Final Sanlu asset auction fails

THE fourth and final auction of assets of Sanlu Group, the bankrupt Chinese dairy company at the center of the melamine contamination scandal, failed yesterday with no bids made.

The assets included the group's shares in 11 dairy companies. Sanlu holds a controlling stake in seven of them.

Four bidders attended the auction in Shijiazhuang, Hebei Province, but none of them bid after the auctioneer announced the starting prices for the assets, including 51 million yuan (US$7.46 million) for 70 percent of shares in the Tangshan Kangsheng Dairy Company.

Yuan Guoliang, chairman of Hebei Jiahai Auction Co Ltd, said he was surprised the auction failed. He said the prices may have been higher than bidders had anticipated. Yuan said the auction company would work with the bankruptcy administrator on how to deal with the remaining assets of Sanlu Group.

Representatives of the four bidding companies left immediately after the auction without answering questions.

Sanlu Group, which was based in Shijiazhuang, had been China's leading seller of milk powder for 15 years until the melamine scandal broke in September last year. The group's revenue hit 10 billion yuan in 2007.

The company's tainted baby milk powder caused the deaths of at least six children and sickened more than 300,000.