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Coke bids for Chinese firm

September 04, 2008|From the Associated Press

HONG KONG — The Coca-Cola Co. moved to expand its operations in the fast-growing Chinese market Wednesday with a $2.5-billion bid for major juice maker China Huiyuan Juice Group.

Under the deal, Coca-Cola's wholly owned subsidiary Atlantic Industries would purchase the Chinese company's shares for 12.20 Hong Kong dollars ($1.56) each, almost triple their last closing price, the companies said. That would value the Beijing-based juice producer at around $2.3 billion.

Coca-Cola also offered to pay for all outstanding convertible bonds and options, bringing the total amount of the deal to as much as $2.51 billion.

According to research firm Dealogic, it would be the largest-ever deal in China's food and beverage industry.

If approved by regulators, the acquisition would mark Coca-Cola's biggest in China since it began operating in the country in 1979.

Huiyuan is China's leading maker of pure fruit juices with about 31 production facilities. Analysts estimate it has about 42% of the pure juice market.

"Huiyuan is a long-established and successful juice brand in China and is highly complementary to the Coca-Cola China business," Coca-Cola Chief Executive Muhtar Kent said. "This acquisition will deliver value to our shareholders and provide a unique opportunity to strengthen our business in China."

Already a leader in the carbonated-drink market, Coca-Cola would become a dominant juice seller in China, said Renee Tai, vice president at CIMB-GK Securities in Hong Kong.

The Atlanta-based company would benefit from Huiyuan's customer base, well-known brand, distribution network and access to local orchards as demand for premium juices rises along with Chinese personal incomes.

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