Last week I wrote a post on Coca-Cola’s efforts to gain a stronger presence in China with its bid for the 17 year-old China Huiyuan Juice Group (CHJG), the country’s largest juice company. Coke is interested in CHJG because while Coke has captured a sizable portion of the carbonated beverage market, its fruit juice line is not as strong. Last Wednesday, Chinese officials rejected Coke’s offer under its anti-monopoly law. In a statement (in Chinese), the Ministry of Commerce cited the need to protect consumers and preserve competition as reasons for rejecting the bid. Some are saying however, the new law allows the government to protect national brands. It has been estimated, but not confirmed, that the two companies together would control around 20 per cent of the juice market.
While the Ministry’s decision did come to some as a shock, the decision could have longer lasting effects on China. The day after the deal’s rejection was announced and reports that Coke might abandon efforts all together, shares of CHJG dropped almost 23 per cent before trading was eventually halted. The shares fell 42.2 per cent in total before regaining some ground, and ended the day at pre-offer, September 2008, levels. Continue reading ‘Coca-Cola’s deal falls flat as Chinese government rejects offer to buy China Huiyuan Juice Group’
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