A spokesman said that the Ministry of Commerce would consider whether the acquisition would disturb competition or harm rival enterprises.
“We are disappointed, but we also respect the MOC's decision,” Muhtar Kent, the president and chief executive officer of Coca-Cola, said in a statement. “We put a tremendous effort into providing all the relevant materials to the MOC to ensure that they had all the information available and understood the transaction,” he added.
China’s anti-monopoly law came into effect on 1 August 2008. Coca-Cola offered to acquire the Chinese juice maker in September 2008. At the time, the offer was subject regulatory approvals from the Chinese government.
Coca-Cola offered shareholders HK$12.20 ($1.58; €1.17) per share and the same amount for outstanding convertible bonds and options. It had received undertakings from three shareholders for the acceptance of the offers, representing about 66 percent of Hui Yuan shares.
The three sellers included Zhu Xinli, Hui Yuan’s founder chairman, who owns 36 per cent, Danone, a French food and beverage company, which owns 23 per cent, and Warburg Pincus, which has a stake of 6.8 per cent, according to the Financial Times. Warburg Pincus invested in Hui Yuan in 2006.
Had the deal gone ahead will full acceptance of Coca-Cola’s offers, it would have likely been the biggest foreign takeover of a Chinese company.
The failure of this deal is not without precedent. Last year, The Carlyle Group pulled out of a $375 million investment in Xugong Group Construction Machinery, which would have given it an 85 percent stake in the company. The two parties had come to an agreement in October 2005, but regulatory approvals were not forthcoming even three years later despite Carlyle reducing the size of the stake it would purchase to a minority 45 percent. That deal was foiled as Beijing tightened regulations surrounding foreign investments aimed at protecting strategic state assets from falling into foreign hands.
Warburg Pincus declined to comment.