BEVERAGES: Coca Cola Bids for Huiyuan

Coca-Cola has bid US$2.4 billion for the Hong Kong listed Chinese juice company Huiyuan. If approved, it will be the largest foreign take-over of a Chinese company.

The deal is part of Coke's strategy to diversify beyond carbonated drinks. It also is attractive because Chinese demand for concentrated juice is increasing with rising incomes. If approved, the combined companies would control 37% of China's juice market.

As such, it is likely to face detailed review under China's relatively-new anti-monopoly law, which took effect only last month. The deal must be reviewed because the combined global turnover of the companies was more than 10 billion yuan (US$1.5 billion) last year, and because each earned more than 400 million yuan in China.

How long the approval process might take is not clear. Authorities have issued minimal guidelines for the law and how it will work in practice is unclear. If the deal receives initial approval, the Ministry of Commerce could still do a detailed anti-trust review.