Coca-Cola Rejects Report It Will Buy Danone's Stake in Wahaha

Coca-Cola Co., the world's largest soft-drink maker, rejected a Chinese newspaper report that it has agreed to acquire Groupe Danone SA's stake in Hangzhou Wahaha Group Co.

"It's wrong, it's absolutely not correct," Kenth Kaerhoeg, a spokesman for Coca-Cola Asia, said today in a phone interview after being asked to comment on a report by the China Securities Journal that said Paris-based Danone had agreed to sell its shares in Wahaha. Danone also denied the report.

The French company has agreed to sell its Wahaha shareholding to Coca-Cola, the Beijing-based newspaper reported on its Web site, citing unidentified people. Danone said there was no such agreement while Wahaha said it hadn't heard about such a deal, the newspaper added.

Danone and Wahaha are involved in at least 25 lawsuits and legal proceedings in five countries in a dispute for control over the Wahaha trademark, which has sales of at least $1.7 billion. Wahaha sells mineral water, tea, fruit juices and baby milk under the Wahaha brand, which means "laughing child" in Chinese.

Danone says Wahaha acted illegally by using the brand name to sell products made by non-joint venture companies. Wahaha says a 1996 agreement to transfer the brand's ownership violated Chinese law.

The newspaper report of Danone planning to sell its stake in Wahaha "is not true," Michael Chu of Ogilvy PR in Shanghai, a spokesman for Danone, said in a phone interview today. "In general we still believe in negotiations with Wahaha."

Wahaha officials weren't immediately available for comment.

Earlier this month, Paris-based Danone agreed to sell its 23 percent stake in Huiyuan Juice Group Ltd. to Coca-Cola, which offered to buy China's biggest maker of fruit juice for $2.3 billion.

The purchase of China's biggest maker of fruit juice by market share would be the biggest overseas purchase by Coca-Cola as it tries to boost its share of non-carbonated drink sales. Chief Executive Officer Muhtar Kent's second acquisition since taking over in July will give Coca-Cola about 20 percent of China's fruit-juice market, helping it maintain its lead over PepsiCo Inc. as U.S. soda sales slow.

Source: Bloomberg