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China to make anti-monopoly review of Coca-Cola deal: report
Beijing (AFP) Sept 8, 2008 China's commerce ministry has said it will make an anti-monopoly review of Coca-Cola's proposed multi-billion-dollar takeover of Chinese juice producer Huiyuan, state media reported. The US soft drink giant's application for the bid will be reviewed under the anti-monopoly law once the ministry receives it, spokesman Yao Shenhong was quoted as saying by state-run China Central Television over the weekend. Yao said a review was necessary because of the large sum of money involved, according to the television station. Coca-Cola announced last week plans to buy Hong Kong-listed Huiyuan Juice Group for 2.4 billion dollars, the US soft drink maker's largest acquisition in China. Analysts have said the takeover, if approved, would be the largest by a foreign firm of a Chinese company, but added the deal had to be reviewed under an anti-monopoly law that took effect last month. The review is required as the combined global turnover of the two firms was more than 10 billion yuan (1.5 billion dollars) in 2007, and as they each made over 400 million yuan in China. The two companies would control 37 percent of China's juice drink market, according to a Merrill Lynch report. It is unclear how long it will take for the government to approve the purchase, as few details about how the anti-monopoly law should be applied in practice have been clarified. The process could become even more complicated amid rising nationalist opposition to the deal, with some Chinese juice companies reportedly planning to send a letter to the commerce ministry to block the bid. They argued the acquisition threatened to force them out of business because Coca-Cola would control a large share of the product distribution network after the deal, Monday's Beijing Morning Post said. Coca-Cola was not immediately available to comment when contacted by AFP on Monday. Chinese regulators have been reluctant to approve some recent foreign acquisitions. Officials in the past have used delaying tactics to stop deals without formally rejecting them. In July, US private equity firm Carlyle Group abandoned an attempt to buy a stake in Chinese construction machinery maker Xugong Group after waiting three years for regulatory approval. Community Email This Article Comment On This Article Share This Article With Planet Earth
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