Coca-Cola dismisses doubts over Huiyuan deal

By Sarah Hills

- Last updated on GMT

Related tags Coca-cola The coca-cola company

Coca-Cola has reaffirmed its commitment to a $2.4bn bid to takeover China's Huiyuan Juice after the Chinese firm’s chairman reportedly cast doubt on the deal.

Coca-Cola announced its bid for Huiyuan, said to be the largest privately owned juice producer in China, in September last year in a move that is expected to expand the drinks giants’ focus on emerging markets for fruit juice products.

But last week quoted Huiyuan’s chairman Zhu Xinli as saying that some Coca-Cola board members opposed the deal as: "Coca-Cola said it was under rather big pressure as there was rising opposition from its board of directors."

In response to this, Coca-Cola has now reaffirmed its support and a spokesperson told “The Company has the Board's full support regarding the proposed Huiyuan acquisition.”

Coca-Cola currently faces an anti-monopoly review of the deal by China's commerce ministry, the MOC.

The company spokesperson added: “At the moment we are focused on the regulatory approval process.

“We are in very regular contact with the MOC, and we try to be as helpful as possible in answering questions and providing supplementary information.

“We have deep respect for the hard work by MOC and it would be inappropriate of us to speculate about when the MOC will be able to finalize the approval process.”

Meanwhile Huiyuan issued a statement to the Hong Kong Stock Exchange to clarify its position in response to the reported comments made by its chairman, according AFP.

It stated: "The company is not aware of the views of any of the directors of The Coca-Cola Company with respect to the offers.

"The company has not received any notification of any change in the terms of the offers."

Huiyuan added that Coca-Cola would be obliged to proceed with its offer if by March 23, all conditions were met, including Beijing approving the deal.

However, it has not been established if Zhu was mistaken or misquoted.

Growth in China

Coca-Cola’s move into the Chinese market appears to be in line with recent strategies to diversify its portfolio from its core carbonated beverage brands following strong growth within its non-carbonated drinks, such as tea and juice-based beverages and bottled water brands.

The company spokesperson said: "Coca-Cola re-entered China in 1979 and is now well known for its sparkling beverage brands such as Coca-Cola, Sprite and Fanta.

“In the last few years, the company has also introduced a number of still beverage brands, including Minute Maid Pulpy and Original Leaf Tea, with the objective of offering consumers a wide range of choices.

“In line with this, the company is seeking to further develop its beverage business through this acquisition.

“Huiyuan is a long-established and well recognized juice brand in China and is highly complementary to the Coca-Cola China business."

Health trend

According to a report by research analyst Euromonitor, while carbonated beverages are predicted to continue to dominate the Chinese beverage industry up to 2010, juices and diet alternatives will be increasingly important within the industry.

Over the next three years, the market for regular carbonated beverages like coke is predicted to fall by 12 per cent, while demand for more health conscious beverages will grow over the same period by 24 per cent.

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