Huiyuan says Coke deal to benefit Chinese economy

HONG KONG, Sept 10 (Reuters) - China Huiyuan Juice Group Ltd (1886.HK) has restated that Coca-Cola Co's (KO.N) $2.5 billion offer for the company would benefit all parties involved and the Chinese economy as a whole.

The deal, which would be the largest takeover in China by a foreign company, has met with some popular opposition and lawyers have said it could be threatened by political manoeuvring. Those concerns have helped push Huiyuan's shares down 17 percent since a huge rally on the day the deal was announced.

The top Chinese juice maker said late on Tuesday that it would work with Coca-Cola to try to ensure that all conditions to the deal, including shareholder consent and regulatory clearance, were satisfied as soon as possible.

The U.S. soft drinks group is paying three times the market price for the Hong Kong-listed Chinese firm in what will be a test case for China's new antitrust law, which became effective last August.

Huiyuan had 44 percent market share by sales value in China's pure juice sector and 42 percent of the nectars market in the first half of 2008, based on AC Nielsen data cited by the company.

Coca-Cola intends to further develop the Huiyuan brand and the completion of the offer is in the best interests of the company, its shareholders, consumers and the Chinese economy, Huiyuan said.

Huiyuan is expanding its production capacity to tap the fast growing juice market in China. It will be able to make 2.9 million tonnes of juice products a year by the end of 2008, up from 2.56 million tonnes at end-June.

The company said late on Tuesday its first half net profit rose 7.2 percent to 367.3 million yuan ($53.71 million), boosted by a profit of 254 million yuan from fair value changes of conversion rights of convertible bonds.

But revenues from its core juice products fell 7.3 percent to 1.18 billion yuan in the first six months of 2008 as severe snowstorms and an earthquake in China's Sichuan province adversely affected sales and profit margins.

For results please read here ($1=6.838 Yuan) (Reporting by Alison Leung; editing by Jonathan Hopfner)