2015-04-17

Coca-Cola Goes Green

Coca-Cola is going green, by buying China Green Group:
Coke to buy China multi-grain drinks maker for $400 million
Coca-Cola Co (KO.N) has agreed to buy the beverage business of China Culiangwang Beverages Holdings Ltd for $400.5 million (266.7 million pounds) including debt, to get a foothold in the fast growing multi-grain drinks category.

The deal marks Coke's first takeover in China since the country's antitrust regulator blocked its bid to buy local fruit juice maker Huiyuan in 2010.

Following the disposal of the beverage business, China Culiangwang will continue to develop its consumer products business, the company said in a stock exchange statement. The sale is subject approval from Chinese antitrust approvals.

Coke is paying a premium to China Culiangwang's market value of $230 million. The company's shares, which have more than doubled this year, were suspended ahead of the announcement. They will resume trading on Monday.
I wonder if Coke is buying now because it's afraid of rising prices. The stock has indeed doubled in the past year, but it has also doubled less than 2 months. If it rises to Coke's price, it will have quadrupled.

If you have been to China, you may have tried these types of drinks before. The Chinese website of of this particular company is here: 中国粗粮王饮品. I enjoyed a similar beverage made by a university in Hubei province. In terms of the marketing appeal, these types of drinks hit the green/health market and would probably also appeal to Westerners, but the flavors may need to be adjusted to appeal to Western tastes.

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