The largest buyout of a Chinese company by an American competitor has been rejected by the Chinese ministry. The $2.4 billion acquisition of Huiyan Juice by Coca-Cola was rejected because it would negatively impact competition. Financial experts see the rebuff as a sign of protectionism as a result of the economy.
"The message is particularly significant given Coke's good corporate-citizen status so visible during the high-priority Beijing Olympics project, as well as its pledge of $2 billion of additional investment in China," said Credit Suisse analyst Carlos Laboy to Reuters.
Reuters also predicts the decision could create a turnabout is fair play situation given the number of companies China is attempting to acquire in other market sectors in other countries. The Chinese ministry posted a statement citing concerns that Coca-Cola could use the decision to "limit competition" in the Chinese juice market. Chinese food analysts say the move was simply to protect its own juice brands.
"We are disappointed, but we also respect the MOC's decision," said Coca-Cola's Chief Executive Muhtar Kent in a statement. Aside from its familiar global Coca-Cola, Sprite and Minute Maid brands, the company also sells Yuan-Ye Green Tea in China. Since 1979, Coca-Cola has invested $1.6 billion in China and plans to invest another $3 billion over the next three years, according to statements made March 6, before the acquisition was declined.