HONG KONG-- Coca-Cola Co. has agreed to buy a Chinese drinks
business, its first attempt to buy a mainland firm after a
high-profile rejection by Beijing of its bid for a maker of juices
and nectars six years ago.
The Atlanta soft-drink giant is buying the beverage business of
China Culiangwang Beverages Holdings Ltd. for an enterprise value
of $400.5 million, the Chinese drinks firm said in a filing to the
Hong Kong stock exchange Friday.
Coke is buying a China Culiangwang drinks operation that makes
"multigrain beverages" with flavors such as red bean, walnut and
oats, a person familiar with the transaction said.
Coke couldn't be immediately reached for comment.
Coke had been steadily acquiring makers of juice, water, and
other noncarbonated drinks around the world in recent years to
broaden its portfolio. But its attempt to bulk up in China through
a $2.4 billion bid for juice maker China Huiyuan Juice Group Ltd in
2009 was turned down by China's Ministry of Commerce on antitrust
grounds. The Huiyuan deal would have been the largest takeover by a
foreign company of a Chinese food or beverage maker.
The deal to buy China Culiangwang's multigrain drinks operations
is also subject to the approval by the Ministry of Commerce.
China Culiangwang said it expects to book a gain of 1.12 billion
yuan ($181 million) from the disposal and will use the net proceeds
to repay the outstanding bonds and other debt. The company, whose
market capitalization is $231 million, has seen its shares soar
112% this year.
Standard Chartered advised China Culiangwang on the deal.
Drinks like China Culiangwang's multigrain beverages, branded as
health drinks, sell well in the country. China Culiangwang said its
multigrain beverage business's unaudited net profit on a pro forma
basis was 193 million yuan in 2014, up 17% from 164.9 million yuan
in 2013, it said in its filing. Apart from multigrain beverages,
China Culiangwang sells snacks, biscuits and cereals.
The acquisition of the grain-drinks maker comes at a time when
Coke is weathering slowing sales in China. Coke in February posted
a 55% plunge in its fourth-quarter profit amid weak sales in
markets including China, Europe and Mexico. It said fourth-quarter
volumes slipped 1% in Europe and in Mexico, which consumes more
Coke products per capita than any other country. Volumes rose just
1% in Asia, including declines of 1% in Japan and 3% in China. Coke
wasn't immediately available for comment.
Write to Prudence Ho at prudence.ho@wsj.com and Chester Yung at
chester.yung@wsj.com
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