The US soft drink giant Coca-Cola (KO), in its constant attempts to further strengthen its global reach, announced last Wednesday plans of buying China’s Huiyuan Juice Group for $2.4 billion through its full subsidiary – Atlantic Industries. If the deal gets approved by the Chinese regulators, it will be Coca-Cola’s largest acquisition in mainland China, and allow it to control a large portion of the product distribution network in the country.
However, China’s commerce ministry said Monday that it will make an anti-monopoly review of the proposed multi-billion-dollar takeover. Spokesman of the ministry, Yao Shenhong, according to Businessday – was quoted as saying by state-run China Central Television over the weekend, that it was necessary for the application of the bid to be reviewed under the anti-monopoly law that took effect last month, because of the large sum of money involved.
Huiyuan, is the largest privately-owned juice producer in China with 43% of the juice market, generating total sales of nearly $400 million last year. The two companies, if allowed to merge, would control 37% of China’s juice drink market – prompting several Chinese juice companies reportedly planning to send a letter to the commerce ministry to block the bid.
Chinese regulators under nationalistic pretenses have been rather reluctant to approve some recent foreign acquisitions. In July, US private equity firm Carlyle Group after waiting three years for regulatory approval abandoned its attempt to buy a stake in Xugong Group, a Chinese construction machinery maker.
It is unclear how long it will take this time for the government to shelve or approve this deal.
Risk Our Money Not Yours | Get 50% Off Any Account
Disclaimer: This page contains affiliate links. If you choose to make a purchase after clicking a link, we may receive a commission at no additional cost to you. Thank you for your support!
Leave a Reply