Ｃｈｉｎａ Ｓａｙｓ“Ｎｏ”ｔｏ Ｃｏｋｅ

Last September, Coca Cola agreed to acquire Huiyuan Juice as it moved to buy its way into fruit-juice businesses in various global markets. Both companies settled the agreement about acquisition and sent the application to the Ministry of Commerce (MOC) for examination and approval. At that time no one expected that this bid could be the first one blocked by the Anti-monopoly Law in China.

Chinas government rejected Coca Cola Co.s $2.4 billion bid to acquire one of Chinas largest juice makers, saying the deal - which would have been the largest-ever foreign takeover of a Chinese company - would unduly restrict competition.

The decision, announced on March 18 by the MOC, was the first major test of the countrys strengthened antimonopoly law and could have a chilling effect on merger and acquisition activity in China, as well as on foreign investment in the country generally. It could also complicate efforts by Chinas own companies to make overseas acquisitions.

In a statement released on March 18 afternoon in Beijing, the MOC said that if Coca Cola were allowed to acquire the juice maker, China Huiyuan Juice Group Ltd., the combined companys market power could “squeeze out” smaller players in Chinas domestic beverage industry and lead to “higher prices” for consumers.

Huiyuan is Chinas largest juice maker. Its share of Chinas pure-juice sector, in terms of sales value, was 32.6% of that market by the end of the year, according to market research firm Euromonitor, a lower share compared with 44% at the end of June.

“We have judged from every aspect and had bad feeling for this bid. Actually, Huiyuan has prepared for the rejection of the acquisition bid early in January,” said an anonymous insider.

Coca Cola and Huiyuan: Respect the Governments Decision

Huiyuan, as the No.1 juice maker in China, has been paid a lot of attention since it was said to be acquired by Coca Cola. On September 4, 2008, not long after the coming out of the acquisition, there was an online survey and over forty thousand people took part in. The result showed that 82.3% of the attendees were against this acquisition bid. The antagonists include not only the ordinary people but also some Chinas domestic juice makers which planned to appeal to the MOC and required to bid for Huiyuan openly.

According to the source knowing Huiyuan well, Huiyuans top management spent the whole afternoon in the conference room on March 18 because of the abrupt announcement made by the MOC to talk about how to deal with this emergent case. “The telephones of Huiyuans public affairs department never stopped ringing,” said the source.

On that night, Huiyuan made an announcement, saying: “Huiyuan Group respects the MOCs decision on the Coca Colas offer notification of acquiring Huiyuan Juice. Now the groups production and operation are OK and unaffected. We are still focusing on providing the consumers with the good-quality, safe, nutritious and healthy products. We also hope everybody can keep on supporting and caring Huiyuan.”