Coca-Cola's acquisition of Huiyuan faces antitrust scrutiny

Coca-Cola plans to acquire 66% shares of Huiyuan Juice for US$ 2.4 billion, seeking the dominant position in China's non-carbonated beverage market. Experts believe that whether the transaction is approved will depend on the substantial impact on competitive efficiency

Caijing Special/Reporter Wang Shanshan Intern reporter Liang Dongmei Coca-Cola Company plans to acquire 66% shares of Huiyuan Juice, a local brand in China, for US$ 2.4 billion, thus establishing its non-carbonated beverage market in China. However, this transaction still needs the approval of the anti-monopoly review department of China.

On September 3rd, China Huiyuan Juice Group Co., Ltd. (HKEx code: 1886, hereinafter referred to as Huiyuan Juice) announced the details of this transaction. Coca-Cola Company has signed an acceptance offer with China Huiyuan Juice Holdings Co., Ltd. (hereinafter referred to as Huiyuan Holdings), Danone and Gourmet Grace, a subsidiary of Huaping Fund, to buy about 66% of Huiyuan Juice held by the latter in cash at a price of HK$ 12.2 per share and all the outstanding convertible bonds and options.

At present, the three major shareholders hold 38.5%, 21% and 6.4% shares of Huiyuan Juice respectively. The total amount of this transaction will reach 17.9 billion Hong Kong dollars (about 2.4 billion US dollars), which is the second largest acquisition in Coca-Cola's history, and the largest foreign acquisition of a controlling stake in a domestic enterprise in China so far.

on September 1st, Huiyuan Juice announced the suspension of trading. The previous trading day closed at HK$ 4.14, and Coca-Cola's offer of HK$ 12.2 per share was 1.95 times higher than that, corresponding to a P/E ratio of 25.99 times. Li Xiaojun, vice president and public relations director of Coca-Cola China, told Caijing that the offer was reasonable.

"Huiyuan is a successful brand, and its juice business in China is very successful. The acquisition of Huiyuan is of great help to the development of our overall business, especially non-carbonated beverages; Its production equipment also helps us to improve operational efficiency. " Li Xiaoyu said.

the seller also acknowledged this offer. Qu Bing, the public relations director of Huiyuan Juice, told Caijing that this was a "win-win" outcome. Ding Ying, a spokesperson for Danone, the second largest shareholder, told Caijing that this quotation reflects the brand value of Huiyuan. Danone first entered as a strategic investor in 26, and now it has received good returns.

On September 3rd, Huiyuan Juice opened higher at HK$ 1.94, and its share price once rushed to HK$ 11.28, and finally closed at HK$ 1.94, with a total turnover of HK$ 2.48 billion, indicating that the market is generally optimistic about this acquisition.

However, this acquisition has yet to be approved by the regulatory authorities in China, including the Ministry of Commerce. Li Xiaojun told Caijing that Coca-Cola Company has submitted the materials needed for antitrust review to relevant departments.

according to the survey data of AC Nielsen, in 27, Huiyuan's market share of 1% fruit juice and medium concentration fruit juice in China reached 42.6% and 39.6% respectively, which was in an obvious leading position. According to the statistics of Euromonitor, the share of Coca-Cola in the fruit and vegetable juice market in China in 27 was 9.7%.

China's latest Anti-Monopoly Law came into effect on August 1st. An expert who participated in the legislation of anti-monopoly law said that according to China's compulsory declaration system before anti-monopoly review, Coca-Cola's acquisition of Huiyuan has reached the declaration standard of concentration of operators. However, he believes that whether or not to approve this transaction will mainly depend on the substantial impact of mergers and acquisitions on competitive efficiency, rather than national sentiment. "The food and beverage industry does not involve national security issues." He said.

The fruit and vegetable juice market in China has developed rapidly in recent years. According to the research data of Euromonitor, the compound annual growth rate of fruit and vegetable juice market in China is 14.5%. By 212, the consumption is expected to exceed 19 billion liters. At the same time, the global growth rate of carbonated drinks has shown a downward trend. The 27 financial report of Coca-Cola Company shows that the global growth rate of carbonated drinks is 4%, while the growth rate of non-carbonated drinks is 12%.

At present, the competition among the world's soft drinks giants has further expanded from carbonated drinks to non-carbonated drinks. In 24, Coca-Cola launched Minute Maid Fruit Orange in China, which was a success. In 27, PepsiCo also introduced its Tropicana brand to China, and launched the first fruit juice beverage product named "Fruit Fun".

The announcement shows that after the tender offer is completed, Coca-Cola will further tender for all the remaining shares of Huiyuan Juice, thus delisting Huiyuan Juice.

Muhtar Kent, CEO and President of Coca-Cola, said in a press release that after the acquisition, Huiyuan's brand and existing business model will be maintained, and Zhu Xinli, the current chairman of Huiyuan Juice, will be the honorary chairman of the new company in the future.

Zhu Xinli founded Huiyuan in Zibo in 1992, and moved its headquarters to Beijing in 1994. In just over ten years, Huiyuan has developed into the most successful local fruit juice beverage brand in China, with annual sales exceeding 2.6 billion yuan. In 26, Danone, together with Huaping Fund and ABN Amro, invested US$ 2 million in Huiyuan. In February 27, Huiyuan Juice was listed on the main board of Hong Kong Stock Exchange.

Huiyuan will announce its 28 interim results in Hong Kong next week. At that time, all current executives of Huiyuan Juice, including Zhu Xinli, will attend. ■

Reference:/28-9 /28-9-3/111139.html