Coca-Cola to aquire Huiyuan Juice for 2.4B

If successful the takeover of Huiyuan Juice will be the second-largest acquisition in Coke's 122-year history.

The deal for China's market leader in fresh juice will further cement the soft drink maker's position in the country where it already dominates the carbonated and diluted drinks markets.

Coke, which was an official sponsor of the Beijing Olympics, sells more than a billion bottles of Coke in China. According to its Chinese website, Coke has invested $1.25bn since making its first foray into the Middle Kingdom in 1979, although both Coke and Pepsi refuse to officially release China-specific figures.

"The approval of the acquisition faces many difficulties," said Mei Xinyu, a researcher at the Chinese Academy of International Trade and Economic Cooperation. "There are two main difficulties. One is the large size of the two companies, which will raise concerns about monopolies. The second is that the brand of Huiyuan is considered to be protected as a famous domestic brand."

Sina reports (in Chinese here) that while some Chinese take an optimistic view of the proposed acquisition, others fear that the Huiyuan brand will disappear and that the purchase will mark the start of a worrying trend of takeovers of homegrown companies by multinationals. According to an online poll conducted by Sina, 82% of over 40,000 respondents opposed Coke’s purchase of Huiyuan.

Such concerns could spill over into the regulatory approvals process. Mei Xinyu, a researcher at a Ministry of Commerce-affiliated think tank, told the state-run Xinhua news agency that the acquisition is likely to face two major hurdles for approval.” One is the large size of the two companies, which will raise concerns about monopolies,” Mei said, according to Xinhua. “The second is that the brand of Huiyuan is considered to be protected as a famous domestic brand.” Huiyuan’s designation as a famous Chinese brand could serve as a rallying point for patriotic citizens who might see the deal as representing the potential loss of a national treasure.

That would be bad news for Coke, which has been doing business in China since 1979, well before Huiyuan was founded in 1992.