Biggest takeover plan on mainland, by Coca-Cola
Coca-Cola yesterday offered to buy China Huiyuan Juice Group, the mainland's top pure juice maker, for HK$19.65 billion in what would be the biggest corporate takeover on the mainland, though the deal faces regulatory uncertainty.
The world's largest beverage maker is offering HK$12.20 per share in cash for Huiyuan shares and an equivalent amount for outstanding convertible bonds and options.
The price is 10 HK cents higher than Huiyuan's highest share price and three times their last closing price of HK$4.14. Shares in Huiyuan soared 172.5 per cent yesterday before closing up 164.3 per cent at HK$10.94 after trading resumed.
The deal, which needs government approval, would create the biggest juice maker in the mainland's highly fragmented but competitive fruit- and vegetable-juice market. The two companies are the mainland's top two juice makers, with a combined 19.4 per cent market share by sales revenue, according to data from Euromonitor.
'Huiyuan is a long-established and successful juice brand in China and is highly complementary to the Coca-Cola China business,' said Coca-Cola chief executive Muhtar Kent.
The company said three major shareholders representing 66 per cent of Huiyuan's shares had accepted the offer. Two are known to be Huiyuan's founder, Zhu Xinli, and France's Groupe Danone, which holds 22.98 per cent of Huiyuan.
'The high offer price demonstrated Coke's determination to make sure the deal can succeed, which looks beneficial for Coke's vision to dominate the market,' said First Shanghai Securities analyst Fila Xu.
However, Mei Xinyu, a researcher at the Ministry of Commerce's research institute of foreign trade and economic co-operation, warned the deal may face regulatory obstacles.
'First of all, this is a takeover deal, unlike previous acquisitions of partial stakes,' Mr Mei said. 'Second, Huiyuan is a famous brand in China; the deal means it's against the government's recent drive to nurture national brands.'
The deal might also need to pass an anti-monopoly review, he said.
A Coca-Cola spokesman said the company was keen to do whatever was needed to secure government approval for the purchase.
Mr Zhu, 56, started Huiyuan from a near-bankrupt canned-fruit plant in Shanghai 16 years ago. Coca-Cola said it intended to keep the Huiyuan brand and make Mr Zhu honorary chairman.
