09/04/2008, 00.00
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Coca Cola set to invade China’s soft-drink market

US multinational launches takeover bid for Huiyuan Juice Group, China’s leading fruit juice maker with an offer worth US$ 2.5 billion, three times the Chinese company’s current value.
Beijing (AsiaNews/Agencies) – The Coca Cola Co. has launched a bid to buy out the Huiyuan Juice Group, a 122-year-old Chinese soft drink company. The cash offer by the Atlanta-based multinational is worth HK.65 billion (US$ 2.5 billion), three times Huiyuan’s current value. The premium is huge: HK$ 12.20 (US$ 1.60) per share against Huiyuan's closing price of HK$ 4.14 before the deal was announced.

After years of double and triple-digit growth, mainland soft-drink producers are struggling with rising costs, falling margins and a wave of consolidation that have eliminated many smaller firms.

As a market leader, Coke is well-positioned and the Huiyuan deal would broaden its footprint in what is already its fourth-largest global market.

Even though the buyout would strengthen the fruit juice segment of the market, the mainland soft-drink market as a whole has seen huge growth, 82 per cent over the past five years, to US$ 32.27 billion in retail sales last year,

Given its potential status as the biggest foreign takeover of a mainland company, regulators in Beijing are sure to look closely at the deal.

But few analysts anticipate any major difficulties or delays because it does not involve a company in strategically sensitive industries such as steel or high-technology machinery.

The US buyers should in the end be assured a deal. In fact Chinese supermarket shelves already show their products side by side (see photo).

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