According to Chinese media, MoC is agreeable to the Coke-Huiyuan deal, but with conditions. Coke must agree to the deal before March 23. Coke will be required to maintain domestic farmers�supply contracts. And, the MoC doesn’t want Coke to use the Huiyuan brand after the acquisit
The proposed Huiyuan deal would be a foreign company’s largest acquisition in China, as well as a crucial test of China’s newly established anti-monopoly mechanism, and failure to approve the deal would have incalculable effect on acquisition attempts by other multinational companies. Anti-monopoly regulators have been evaluating the deal since it was announced in September last year.
The deal is politically problematic in China. Huiyuan’s rivals and various protectionists have been lobbying the MoC to stop the acquisition by applying pressure directly and through the media.
Huiyuan is listed in Hong Kong, and holds a 42% share of China’s juice market. Coke’s offer of HK$12.20 per share is almost three times Huiyuan’s closing price before it s trading was suspended.
Coke’s recently announced $2 billion additional investment in China may be at stake. Such regulatory niggling would also add to Coke’s major frustration in China’s non-carbonate beverage market.
If the deal were to fail because of regulatory pressure, China would be seen as reinforcing protectionism. The US has in the past made Chinese acquisitions difficult on its home ground, and rejection of the Huiyuan deal would certainly be interpreted as a revenge move.
The MoC declared it would decide before this Friday whether to approve or reject the deal, or extend the review beyond the March 23 deadline. After that Coke will have the right to reconsider acquisition terms.  Â
Huiyuan’s sellers include its founder and chairman Zhu Lixin, with a 36% stake, Danone, with a 23% stake, and Warburg Pincus, a US-based private company, with a 6.8% stake.
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