Firms Facing a New Great Wall of China; EMERGING MARKETS Coca-Cola Bid Is Rejected in New Sign of Chinese Move to Protectionism Cheap Russian Steel Brings Dramatic Drop in Overseas Orders

The Birmingham Post (England), March 19, 2009 | Go to article overview

Firms Facing a New Great Wall of China; EMERGING MARKETS Coca-Cola Bid Is Rejected in New Sign of Chinese Move to Protectionism Cheap Russian Steel Brings Dramatic Drop in Overseas Orders


Byline: Michael Weiand Tony Munroe

China has rejected Coca-Cola's planned EUR2.4billion (pounds 1.6billion) acquisition of top juice maker Huiyuan Juice - saying the deal would have been bad for competition.

The acquisition by Coca-Cola would have been the largest buyout of a Chinese company by a foreignrival, but was rebuffed in what is sure to be seen as another sign of the protectionism that has been mounting globally as much of the world is gripped by recession.

"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 EUR2billion of additional investment in China," said Credit Suisse analyst Carlos Laboy.

Observers said China's ruling on Coke could cut both ways in that Chinese companies that have been making increasingly high-profile acquisitions abroad may run into trouble.

Australia's Foreign Investment Review Board is considering three big investments by Chinese state-run companies in its mining sector.

In particular, political opposition to Rio Tinto Ltd's planned pounds 13.6billion tieup with Chinese state-owned Chinalco has been intensifying, and on Wednesday the Australian Senate said it would launch its own inquiry into foreign investment.

"It indicates that foreign acquisitions of Chinese companies, particularly those with prominent brands, will not be regarded favourably by the Ministry of Commerce," said Lester Ross, managing partner with the Wilmer Hale law firm in Beijing.

"And that, conversely, indicates that Chinese companies seeking to make acquisitions overseas may encounter an adverse reaction in those markets, if foreign companies are essentially frozen out of the Chinese marke," he said.

Ross said it was very unlikely the Chinese ministry would have made its decision without higher political clearance and, if that is the case, "it's entirely natural to anticipate that other countries will regard acquisitions by Chinese companies in a very similar way."

China's Ministry of Commerce rejected the transaction 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.

Coca-Cola, the world's largest soft drink maker, said it held a long-term view of the Chinese market and would now focus on increasing its sales of existing brands and innovating with new ones.

"We are disappointed, but we also respect the MOC's decision," said Chief Executive Muhtar Kent in a statement.

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.

Hodges owns Coke shares among its pounds 525million in assets under management.

Given the deal's high multiple and Huiyuan's weakening growth outlook, Stifel Nicolausanalyst Mark Swartzberg said he saw the news as positive.

Swartzberg noted that Coke had suspendeditsshare repurchase programme when the dealwas announced, and said he now believes it will be resumed.

A Coca-Cola spokesman said it was premature to comment on buybacks.

JPMorgan analyst Selina Sia said the two companies would have held a combined 40 per cent of China's fruit juice market, and the ruling was not a surprise. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Firms Facing a New Great Wall of China; EMERGING MARKETS Coca-Cola Bid Is Rejected in New Sign of Chinese Move to Protectionism Cheap Russian Steel Brings Dramatic Drop in Overseas Orders
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.