China Modern Dairy has dismissed reports it has received a takeover approach, reported to be from local rival Mengniu – but admitted it is in talks over a potential disposal of “certain assets”.

In a statement to the Hong Kong stock exchange, China Modern Dairy has moved to reassure shareholders rumours related to a possible acquisition of the company were unfounded.

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“The company has not received any approach from any party in relation to any proposed acquisition,” the milk processor said late last week. The company did, however, say it had held preliminary discussions over a possible asset sale but did not name the firm with which it was holding talks.

“The company has held certain preliminary discussions with a third party in connection with a possible disposal of certain assets of the group. However, no material terms concerning the possible disposal has been agreed and the company has not entered into any definitive agreement in relation to the possible disposal.”

In a similar announcement on Friday, Mengniu said there had been informal talks with a Hong Kong-traded company engaged in the dairy farming business about the acquisition of certain assets. Again, it did not name the company.

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“The board re-iterates that such talks are very preliminary and the company has not made any decision regarding the alleged acquisition,” it said.

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This is not the first time the two firms have been linked. Frank Ning, chairman of state-owned COFCO, which owns around 20$ of Mengniu, told Bloomberg in January there had been discussions between the two dairy processors, without much progress. Bloomberg first reported on discussions last August. 

China Modern Dairy said in its notice last week it will make further announcements “as and when necessary”.