Coca-Cola offers $2.4 billion for Chinese juicemaker Huiyuan

(Xinhua)
Updated: 2008-09-03 22:32

BEIJING - Coca-Cola said on Wednesday it has offered to buy Huiyuan, China's largest fruit juice company, for the equivalent of US$2.4 billion in cash, in what would be the second-largest acquisition in the US-based company's history.

Packets of Huiyuan fruit juice are seen at a supermarket in Beijing September 3, 2008. Coca-Cola said on Wednesday it has offered to buy Huiyuan, China's largest fruit juice company, for the equivalent of US$2.4 billion in cash. [Agencies]

Coke said the offer needed to be approved by the Chinese government.

The prospects of approval are unclear. In July, China turned down an offer by US-based private equity company Carlyle Group to acquire the Xugong Group Construction Machinery Co.

"The approval of the acquisition faces many difficulties," said Mei Xinyu, a researcher at the Chinese Academy of International Trade and Economic Cooperation, a government think tank that is under the Ministry of Commerce.

"There are two main difficulties. One is the large size of the two companies, which will raise concerns about monopolies," Mei told Xinhua. "The second is that the brand of Huiyuan is considered to be protected as a famous domestic brand," he said.

If successful, the acquisition of Huiyuan would represent the largest purchase of a controlling stake in a Chinese company by a foreign company, according to Thomsom Reuters.

Coca-Cola intends to make an all-cash offer to purchase China Huiyuan Juice Group Limited, a Hong Kong-listed company that owns the Huiyuan juice business throughout China. The deal is part of a larger program to grow internationally through acquisitions.

Coca-Cola is offering 12.20 Hong Kong dollars (about US$1.56) per share and an equivalent price for outstanding convertible bonds and options. It said it has accepted irrevocable undertakings from three major shareholders for acceptance of the offers, in aggregate representing approximately 66 percent of the Huiyuan shares.

"Huiyuan is a long-established and successful juice brand in China and is highly complementary to the Coca-Cola China business," said Muhtar Kent, president of Coca-Cola.

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