Beverages News
- China's biggest beverage maker resists acquisition
Date: 11-Apr-2007 Sources: (Xinhua Online)
China's biggest beverage maker is firmly opposed to French food giant Group Danone SA's planned acquisition and may break up their ties, a top company official said.
Hangzhou Wahaha Group, in which Danone has a 51 percent stake, will not agree to the French firm's plan to buy its remaining assets for 4 billion yuan, Zong Qinghou, chairman of the Chinese beverage maker, said in an online broadcast on Sina.com, the country's most popular portal.
'Danone wants to buy our remaining companies that are not included in our joint ventures, and we are not consenting,' Zong said.
Danone, the world's largest yogurt maker, set up five joint ventures with Wahaha in 1996 under an agreement that bars Wahaha from making products that compete with those produced by these ventures, or using the Wahaha brand without Danone's consent.
'We consider such provisions unfair, prohibiting us from making goods that are produced by the joint ventures while imposing no restrictions on Danone itself,' Zong said.
Danone, according to Zong, has invested 1.5 billion yuan in the ventures with Wahaha and has made a profit of 3.8 billion yuan in them.
Danone was unavailable for comment, but said in a public letter to Sina.com that Zong's comments 'are not in line with the facts'.
Danone, famous for its aggressive acquisitions in the Chinese market, has so far bought stakes in at least seven leading Chinese food and dairy companies since it entered China in 1987.
It has stakes in Shanghai-based Bright Dairy & Food Co, Shenzhen Health Food Co, Guangdong Robust Group and Shanghai Aquarius Drinking Water Corp.
Danone also owns a 22 percent stake in Beijing-based Huiyuan Juice Holdings Co, the country's largest fruit juices producer, making it the second-biggest shareholder in the Hong Kong-listed firm.
Last December, the French dairy maker formed joint ventures with China Mengniu Dairy Co, the country's biggest liquid milk producer, in which it holds 49 percent of the stake.
But some critics have accused the French firm of trying to create a monopoly in the Chinese beverage market and dumping its home-grown brands at local companies after buying into them.
In an online poll conducted by Sina.com, 91.68 percent of the 25,000-odd participants think Danone's latest move to acquire Wahaha is aimed at creating a monopoly in the Chinese beverage market.
'The government should work out regulations to protect domestic companies from malicious acquisitions,' appealed Zong, a teacher turned entrepreneur.
Founded in 1988, Wahaha Group, based in East China's Zhejiang Province, has assets of 8.8 billion yuan and employs about 20,000 people.
The net profit of the company, which manufactures mineral water, tea, fruit juice and baby milk, increased to 2.2 billion yuan in 2006, while pre-tax profit jumped 48 percent to 3.2 billion yuan.
Sponsor Results:
