The difficulty in investing in China and the suspicion its state-controlled corporations still arouse when doing the same overseas were laid bare Wednesday with two politically charged developments.
In China, the Ministry of Commerce rejected Coca-Cola Co.'s (NYSE:KO) $2.3 billion bid for China Huiyuan Juice Group Ltd. (HK:1886). The transaction would have been the largest ever foreign takeover of a Chinese company -- it was also the first major test of anti-monopoly legislation enacted in August. The government cited competition concerns -- but some say the rejection was designed to protect domestic beverages makers and placate a hostile public.
Meanwhile, Australia's Senate Economics Committee said it would investigate foreign investment laws. The lawmakers were reacting primarily to Aluminum Corp. of China's (HK:2600) planned $19.5 billion investment and asset purchase agreement with Rio Tinto Group plc (AU:RIO), the Anglo-Australian mining group seen in Canberra as a national champion.
The Australian public fiercely oppose the Rio Tinto deal -- as do many Rio Tinto shareholders, who have accused the debt-laden mining company of selling the family silver. Over in the U.K., where Rio Tinto has its other headquarters, the deal has hardly registered among consumers and lawmakers, who are busy grappling with the worst recession in the industrialized world. - Laura Board
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