Coca-Cola to address anti-trust fear on Huiyuan deal

Analysts and lawyers said the application will be closely watched as it is the first case to test the nascent law.

Fears that the deal -- which critics warn would mark the loss of a local champion to foreign control -- could be derailed under the anti-monopoly regulations, have helped push down Huiyuan Juice Group's shares 13 percent from its year high on Sept 3, struck after the purchase was announced.

"This will be the very first case under China's antitrust law, implemented on August 1," Huiyuan's Chief Financial Officer Francis Ng told a news conference on Wednesday.

"The offer price had been carefully considered by both the buyer and the sellers," said Ng, when asked whether he thought the offer price was fair.

Coca-Cola's Hong-based spokesman Kenth Kaerhoeg said: "We will obviously comply with the process, and we'll facilitate it based on what the regulators ask of us."

"It would be inappropriate to comment on the regulatory process," he added.

The European Union Chamber of Commerce in China said on Tuesday rising economic nationalism was deterring investment by European companies and hampering access to the domestic market, saying the Huiyuan deal would be a litmus test of Beijing's attitude toward foreign business.

Still, Coca-Cola, looking to make inroads into a pure-juice segment of the market it is absent in and shoring up its lead in the overall domestic beverages industry, is paying three times the market price for the Hong Kong-listed Chinese firm.

Huiyuan had 44 percent market share by sales value in China's pure juice sector and 42 percent of the nectars market in 2008's first half, based on AC Nielsen data cited by the company.

The company is expanding its production capacity to tap the fast-growing juice market in China. It will be able to make 2.9 million tonnes of juice products a year by the end of 2008, up from 2.56 million tonnes at the end of June.

Huiyuan shares eased 1.3 percent on Wednesday to HK$9.77, well below Coca-Cola's offer of HK$12.2 each. But they outperformed a 1.6 percent fall in the blue-chip Hang Seng Index and the index for Chinese firms listed in Hong Kong, which lost nearly 2 percent.

"The partnership with Coca-Cola will further develop the Huiyuan brand in a competitive global beverage market and provide a larger and more competitive platform for Huiyuan's business and employees," Huiyuan Chairman Zhu Xinli said in a statement late on Tuesday.