Beijing: China has rejected a plan by Coca-Cola to acquire the nation’s top juice maker Huiyuan over fears that it would damage competition, the commerce ministry said Wednesday.
The acquisition would produce “a negative influence on competition,” the ministry said in a statement.
The $2.4-billion deal, which would have been the largest-ever foreign acquisition of a Chinese company, was seen as a major first test of how China would apply a new anti-monopoly law.
Concerns had emerged that the law, in force since August, would be used by the government to bar foreign enterprises from key sectors of the Chinese economy.
“The juice industry is not a sensitive industry for the Chinese government, but it still doesn’t want a foreign brand to own a major Chinese brand,” said Renee Tai, a Hong Kong-based analyst with CIMB-GK Securities.
Coca-Cola’s plan to acquire Huiyuan attracted huge attention when it was announced last year.
The Chinese juice maker controls one of the nation’s most recognisable brands and boasts about 40% of the Chinese market in pure fruit juices.
The Financial Times, when reporting earlier Wednesday that the deal might not materialise, said its collapse would be a “blow to multinational companies seeking to make acquisitions in China.”