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Bob Moon: If you can’t exactly buy the world a Coke, maybe buying a huge share of the global marketplace is the next best thing. A company called Huiyuan is the market-leading juice maker in China, and now Coca-Cola wants to juice up its own business for a price tag of $2.5 billion dollars. The only acquisitions by foreign companies that come close to this in China have been for minority stakes in the country’s banks.
Marketplace’s Scott Tong joins us from Shanghai. Good morning, and I guess it’s no big surprise that Coke would like a bigger piece of a very big customer base.
Scott Tong: It comes as no surprise because, obviously, the market for selling anything in the U.S. is going sideways for a lot of companies or going down, and China is still expanding at an 8 or 9 or 10 percent clip. The other part of it is Coca-Cola is trying to expand beyond soft drinks, and so juice and bottled tea and all of these other things, including coffee in China, are taking off as a drink market. And Coca-Cola really wants to take advantage of that.
Moon: Why now? What’s behind the timing of this?
Tong: It’s always hard to know, but I spoke to a couple of people who think it’s no accident that this is coming soon after the Olympics. And most branding experts say if you wanted to pick the No. 1 winner as far as international Olympic sponsorship, it would be Coca-Cola. I mean, Coca-Cola owned the place. You couldn’t buy a drink from any other company in the entire Olympics complex. So their branding in China and among Chinese officials is substantial here.
Moon: This would be the biggest acquisition in China so far. Any regulatory problems with that?
Tong: It’s always a question that foreign companies have to ask in China. Sometimes domestic players have waved the flag saying this doesn’t help China’s future, and the regulators have stayed quiet or allow deals to just kind of fall apart. So, that could happen here and with a high-profile acquisition like this you never know.
Moon: Marketplace’s Scott Tong in Shanghai. Thank you.
Tong: Ok, Bob.
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