Coca-Cola’s desire to purchase Chinese juice company Huiyuan for $2.4 billion is facing both political and popular protests, just a week after the deal was announced.
The deal will be the first to face China’s new antitrust regulations, and Coke hasn’t begun to approach the government to plead its case. Coke needs to get a move on because the Chinese press is starting to bash the deal, saying it will hurt the Chinese economy and Chinese workers.
WSJ: Among the recent reports is the news of layoffs at a Huiyuan factory near Beijing, citing “insiders” who claimed the job cuts were taken in preparation for the company’s sale to Coke and unnamed staff expressing fears of future layoffs. (Beijing Business Today report here in Chinese).
Coke says that it is committed to growing the Huiyuan business, which should provide enhanced opportunities for Huiyuan employees.
More damaging may be the allegations that Coke is trying to silence critics of the deal in China, which were published in this Chinese-language article from the Beijing Morning Post. The origin of those allegations appears to lie in some ill-advised statements made by lawyer Qian Weiqing in an Internet discussion last week, in which he offered a pessimistic opinion about Coke’s chances of winning public and regulatory approval for the Huiyuan purchase. Qian is a senior partner at the Dacheng Law Firm, which counts Coke as a client, and within a few days all references to Qian and his statements were subsequently removed from the Web site where they had appeared. Coke has been blamed for pressuring Qian and his firm to retract the statements– a charge that the company strongly denies.
Huiyuan came out and tried to squash some of the negative sentiment today.
Reuters: China Huiyuan Juice Group Ltd has restated that Coca-Cola Co’s $2.5 billion offer for the company would benefit all parties involved and the Chinese economy as a whole.
The deal, which would be the largest takeover in China by a foreign company, has met with some popular opposition and lawyers have said it could be threatened by political manoeuvring. Those concerns have helped push Huiyuan’s shares down 17 per cent since a huge rally on the day the deal was announced.
The top Chinese juice maker said late on Tuesday that it would work with Coca-Cola to try to ensure that all conditions to the deal, including shareholder consent and regulatory clearance, were satisfied as soon as possible.
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