Several newspapers have already suggested in the last six months that the Tawian group has made Sanyuan an offer but both companies have repeatedly denied the reports. Uni-President even went as far as issuing a statement on the stock exchange last month to clear up the rumours.
However Beijing paper The Economic Observer has triggered new rumours with its recent report that a person close to the Shanghai headquarters of Uni-President's investment branch had confirmed that Uni-President has signed a contract with Sanyuan Food for 35 per cent of its shares.
Neither company had revealed the price paid for the shares, according to the paper.
According to an insider at the Sanyuan Group, the biggest shareholder of Shanghai-listed Sanyuan Food, around ten investment firms and companies such as Danone and Mengniu had contacted the group seeking to acquire shares in its dairy business but the firms' offers were refused.
Uni-President may however offer prove a valuable strategic investor for the firm, which does not need extra capacity but rather a boost to its sales after suffering losses over the last two years.
"A pure production enterprise would be of little help; a strategic investor would be ideal if it has experience in dairy industry and can increase Sanyuan's sales," the source told the paper.
Sanyuan has been losing market share and profits as competition becomes tougher than ever in China's rapidly growing dairy market.
However Bo Guanhui, an analyst at Citic Securities, expressed doubts about Uni-President's ability to improve Sanyuan's future.
"Sanyuan's business is mainly in yoghurt and fresh milk, and that requires cold chain transportation. I am doubtful that Uni-President's sales channel, which uses normal temperature transportation for instant noodles, would be a plus for Sanyuan," he told AP-Foodtechnology.com.
He added that Yili and Mengniu are the unquestionable industry leaders. "Their positions are unshakable. Others are just regional players."
But Uni-President is keen to grow its presence in China's dairy sector. Among the top three in Taiwan's dairy market, on the mainland it only has a 15 per cent share in Wandashan Dairy, a Heilongjiang-based and second-tier dairy.
Sanyuan's brand and its big share of Beijing's large market would help it counter the pressure from rival Tingxin group.
Once again, however, a Uni-President spokesman denied all reports to AP-Foodtechnology.com.
"We have not released any news about cooperation with the Sanyuan Group. This is clearly a rumour," he said.
Additional reporting by Francis Yang.
