Coca-Cola to buy beverage business of China Green Group for $400.5 mn

Coca-Cola Co today struck a deal to buy the beverage business of China Culiangwang Beverages Holdings Ltd (China Green Group) for $400.5 million, including debt, as part of its plan to enter multi-grain drinks market in China.

China Green Group, China's leading integrated green-food provider, has agreed to sell its wholly-owned subsidiary Xiamen Culiangwang Beverage Technology Co Ltd (Xiamen Culiangwang) to Coca-Cola Beverages (Shanghai) for HK$3.1039 billion) ($400.5 million) in cash.

The deal is the first for Coca-Cola in China after the country's anti-trust authorities blocked its proposed $2.4-billion acquisition of Beijing-based Chinese juice maker Huiyuan Juice in 2009. (See: China trips Coke on Huiyuan Juice acquisition)

The Xiamen Culiangwang deal is also subject to approval by the Chinese regulators.

Post closing, China Green will enter into an agreement to supply certain raw materials to Xiamen Culiangwang for the manufacture of beverages and raw materials for at least five years.

''This cooperative agreement with Coca-Cola Company, a global beverage leader, represents their approval to China Green Group's products and will further enhance the international recognition of the ''China Green'' brand while also favouring the launch of our multi-grain snacks in the future,'' said Sun Shao Feng, chairman of China Green.

''The disposal does not change our overall strategy and commitment to offering high-quality and secure multi-grain raw materials to global food and beverage manufacturers. It will, however, generate abundant funds for us to integrate the existing upstream, midstream and downstream business, allowing us to explore new market opportunities and enhance fresh produce and deep-processing operations for multi-grain products and other businesses,'' he added.

China Culiangwang is an integrated green foods provider in China, principally engaged in sales of ''Cu Liang Wang'' branded beverages and food products.

The company also provides various agricultural products for both domestic and international markets, including fresh produce and processed products.

Coca-Cola is one of the most well-known international brands in China, with a leading position in the soft drinks market.

It has over 15 brands and more than 50 different beverage flavours in China. Since re-entering China in 1979, Coca-Cola has invested over $9 billion in China and has 43 plants.