Shanghai-listed Beijing Sanyuan Foods Co has cooperated with Beijing-based property developer Macrolink Group Ltd to buy three bankrupt units of dairy company Hunan Taizinai Group Co for 720 million yuan ($112.7 million), the company confirmed Monday. 

"The acquired assets of Taizinai can continue production. The company has a certain brand influence and can complement Sanyuan's existing product and market structure for long-term development," Sanyuan said in an announcement.

The deal is still subject to approval from the creditors of Taizinai's three bankrupt units, as well as from the Zhuzhou Intermediate People's Court, where Taizinai is headquartered, the announcement said.

"Taizinai is quite a strong brand in Central and South China as it's based in Zhuzhou, Hunan Province and is well known for its yogurt drinks," Yan Qiang, a consumer goods consultant with Beijing-based Adfaith Management Consulting, told the Global Times Monday.

"Sanyuan is still a regional rather than a national enterprise, with its business in and around Beijing and no coverage in the south of China. So the acquisition of a Hunan-based dairy firm can help it expand into the southern market. Taizinai's equipment and industrial chain are also valuable for Sanyuan," said Yan.

Regarding the cooperation with Macrolink, Yan pointed out that Sanyuan's expansion plan requires funds, "and one of the best ways is to cooperate with a company with abundant cash," he said.

However, the brand of Taizinai doesn't have as much influence in Central and South China as it used to, Chen Lianfang, a dairy industry analyst with Beijing Orient Agribusiness Consultant, told the Global Times Monday.

Chen also speculated that there might have been government involvement in the deal, as Macrolink President Fu Jun is from Zhuzhou, the headquarters of Taizinai.

Following its acquisition of Sanlu Group 2009, the hardest-hit dairy firm in the scandal over melamine-tainted milk in 2008, Sanyuan reported losses of 129 million yuan in 2009 and 76.21 million yuan in the first three quarters of 2010, raising doubts over Sanyuan's management and the company's future.

However, Yan from Adfaith said Sanyuan's losses were largely a result of the milk scandal, which affected the entire dairy industry, and the global economic crisis since 2008.

"If Sanyuan can do well in the integration of teams, industrial chains and brands, its scale can be expanded. However, if integration problems cannot be solved, its operating efficiency will be affected," said Yan.

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