Coca-Cola’s Coup in China

The New York Times blog reports on ’s recent purchase of Chinese juice maker :

Coca-Cola bought the juice maker for about six times its 2007 earnings, whereas Coca-Cola, arguably one of the world’s premier beverage companies, trades at only four times its 2007 earnings. If Coca-Cola had paid such a high price for a company in the United States — or, frankly, anywhere else in the world — its stock would have been punished far more severely.

But the $2.4 billion price tag gives Coke something extremely unusual: control of a Chinese company.

The Chinese government resists foreigners coming in and gobbling up home-grown companies — even ones like Huiyuan, which wasn’t doing so well. After all, China is a reforming, communist dictatorship where private property rights were introduced just a few years ago.

Read also “Coke’s US$2.4B juice deal signals thirst for China companies” from the Financial Post.

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