商务部否决可口可乐并购汇源

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China said on Wednesday that it has rejected a bid by the Coca-Cola Company to acquire one of the country's biggest beverage makers for about $2.4 billion. The move blocked what would have been the biggest foreign takeover of a Chinese company and suggested Beijing is still uncomfortable with foreign ownership of big Chinese companies.

The Ministry of Commerce said the Coke's bid to acquire the China Huiyuan Juice Company was rejected on anti-trust reasons. The government said the deal would allow Coke to dominate a huge segment of the beverage market here.

In a statement released Wednesday, the Commerce Ministry said it was worried that Coke would "set up some exclusive terms to restrict competition in the juice market," drive up the consumer prices and squeeze out smaller beverage makers.

Trading in Huiyuan shares was halted early Wednesday in Hong Kong ahead of the announcement. The shares of other Chinese beverage makers, which could have also been takeover targets, tumbled on speculation that the deal would be rejected by regulators. Shares of Huiyuan have lost about 30 percent of their value since the deal was announced last September.

Spokesmen for Coca-Cola and Huiyuan, which is based in Beijing, could not be reached Wednesday.

A spokesman for Coca-Cola could not be reached for comment Wednesday. Officials at Huiyuan, which is based in Beijing, also could not be reached.

The deal is considered not only an early test of China's new anti-monopoly law but also whether Beijing will allow foreign companies greater latitude to acquire big Chinese companies.

Very few foreign companies have taken full control of a major Chinese company. But many legal analysts said they had expected the deal to be approved because China itself is moving aggressively this year to acquire foreign assets during the global economic downturn.

Steve Dickinson, a China-based attorney at Harris Moure, says China usually restricts foreign takeovers because of a longstanding belief that state assets should not be controlled by foreign entities.

"China's very open to green field investments, allowing foreign companies to start up businesses," Mr. Dickinson said Wednesday. "But China strongly discourages outright purchases of existing Chinese companies to enter the China market."

Huiyuan Juice which had revenues of about $380 million in 2007, is one of China's biggest producers of fresh apple, orange and pear juice. The company is privately owned and two foreign companies hold minority stakes: Groupe Danone of France and Warburg Pincus, the American private equity firm.

The bid by Coke was part of the company's aggressive expansion effort in China, where it already has a large presence. The company sells over a billion bottles of Coke annually, and markets its Sprite and Minute Maid brands here.

Just a week ago, Coke pledged to further expand its presence in China, despite the economic downturn, by investing an additional $2 billion in China over the next three years.