China’s commerce ministry said it would make an anti-monopoly review of Coca-Cola’s proposed multibillion-dollar takeover of Chinese juice producer Huiyuan (匯源果汁), state media reported.
The US soft drink giant’s application for the bid will be reviewed under the anti-monopoly law once the ministry receives it, spokesman Yao Shenhong (姚申洪) was quoted as saying by state-run China Central Television over the weekend.
Yao said a review was needed because of the large sum of money involved, the TV station said.
Coca-Cola announced last week plans to buy Hong Kong-listed Huiyuan Juice Group for US$2.4 billion, the US soft drink maker’s largest acquisition in China.
Analysts have said the takeover, if approved, would be the largest by a foreign firm of a Chinese company, but added the deal had to be reviewed under an anti-monopoly law that took effect last month.
The review is required as the combined global turnover of the two firms was more than 10 billion yuan (US$1.5 billion) last year and as they each made over 400 million yuan in China.
The two companies would control 37 percent of China’s juice drink market, a Merrill Lynch report said.
It was unclear how long it would take for the government to approve the purchase, as few details about how the anti-monopoly law should be applied in practice have been clarified.
The process could become even more complicated amid rising nationalist opposition to the deal, with some Chinese juice companies reportedly planning to send a letter to the commerce ministry to block the bid.
They argued the acquisition threatened to force them out of business because Coca-Cola would control a large share of the product distribution network after the deal, yesterday’s Beijing Morning Post said.
Chinese regulators have been reluctant to approve some recent foreign acquisitions. Officials in the past have used delaying tactics to stop deals without formally rejecting them.
In July, US private equity firm Carlyle Group dropped an attempt to buy a stake in Chinese construction machinery maker Xugong Group (徐工集團) after waiting three years for approval.
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