Friday, April 24, 2009

Coke, Huiyuan in formal talks after deal blocked

* Coca-Cola holding informal talks with Huiyuan -source

* Talks could include taking minority stakes in assets-WSJ

(Adds further details, background)

By Joseph Chaney and Fion Li

HONG KONG, April 23 (Reuters) - Coca-Cola <KO.N> is holding informal talks with China Huiyuan Juice <1886.HK> to weigh partnership options after China blocked its takeover of the company last month, a source familiar with the situation said.

In March, China rejected Coca-Cola's planned $2.4 billion acquisition of top juice maker Huiyuan, saying the deal would have been bad for competition. The acquisition would have been the largest-ever buyout of a Chinese company by a foreign rival.

"After the deal collapsed there have been discussions in Beijing," the source said, adding that the talks with senior Huiyuan management are at an informal stage.

The source declined to be named due to the sensitive nature of the situation.

Coca-Cola is in negotiations with Huiyuan that could include taking a minority stake in the Chinese juice maker's assets, a Wall Street Journal report citing unidentified sources said on Thursday.

China's Ministry of Commerce rejected the takeover deal under an anti-monopoly law enacted last year, saying in a statement that Coca-Cola's changes to the deal were insufficient to allay its concerns.

At the time of the decision, Gary Bradshaw, a portfolio manager at Dallas-based Hodges Capital Management, called the rejection "a minor setback" for Coca-Cola rather than "a major slap in the face".

"They'll probably regroup and try to go at it from a different angle," Bradshaw said.

A Huiyuan spokeswoman in Beijing declined to comment.

"It is our policy not to comment on speculation," Kenth Kaerhoeg, a Coca-Cola spokesman in Hong Kong said.


Blogged with the Flock Browser