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Shares surge after Coke reports

SHARES in China Huiyuan Juice Group surged 13 percent yesterday after reports that the Coca Cola Co had contacted the Chinese beverage maker again over a possible partnership.

Coke's US$2.4-billion buyout plan for Huiyuan failed to win approval from China's central government last month after an anti-monopoly review. The deal would have been the biggest takeover of a Chinese company by a foreign competitor.

A Wall Street Journal report citing unnamed sources said on Thursday that Coke was in negotiation with Huiyuan with the hope of taking a minority stake in the nation's biggest pure juice maker. Reuters also said Coke had held informal talks with Huiyuan.

Both companies declined to comment on the reports yesterday.

"Coke may not be willing to give up Huiyuan because of the huge market potential for China's juice market," said Liu Jinhu, an analyst from Guohai Securities Co.

Huiyuan's shares closed at HK$5.74 (US$0.74) yesterday after hitting a high of HK$6.30. But that was still less than half the HK$12.20 per share previously offered by Coke. Huiyuan has been seeking new investors as it needs money to diversify to the diluted juice market.

Huiyuan's Chairman Zhu Xinli said the company had been approached by several interested investors with media reports suggesting they included Taiwan Uni-President Enterprises Corp and PepsiCo Inc.

Coca Cola is seeking to accelerate its development in China and boost its share of the juice market as demand for sparkling drinks falls.

Coca-Cola's sales by volume rose 19 percent last year in China.


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