Mengniu shareholders return with another sell-down

Two key shareholders in China Mengniu Dairy returned to the capital markets last night after a two-year absence, selling another HK$1.21 billion ($156 million) worth of stock. This is their fifth sell-down since the private sector producer of milk and other dairy products went public in 2004, although the divestments came to a halt after the company was involved in an industry-wide scandal where melamine-tainted milk caused the death of four babies and put more than 10,000 in hospital in September 2008.

An investigation into the issue found that Chinese milk producers were knowingly lacing their milk with melanine, a chemical also used to make unbreakable plates and as an industrial additive, to improve the taste and conceal the fact that they had also been watering down their milk to boost margins.