Huiyuan Juice falls 8.3% after major investor bails out
Updated: 2009-06-10 07:28
By George Ng(HK Edition)
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HONG KONG: China Huiyuan Juice Group Ltd shares tumbled yesterday after reports that US private equity fund Warburg Pincus had sold its stake in the juice maker sparked fears other major investors may exit too.
The share price of the Beijing-based juice and nectar maker slumped 8.3 percent to close at HK$5.96 after hitting an intraday low of HK$5.85.
"The company's share price could continue to be under pressure in the near term as Warburg Pincus' move could imply that institutional investors are becoming less bullish about its prospects," said Matthew Kwok, research head at Tanrich Securities.
Expectations for a marriage with suitors have eased after Coca-Cola's $2.4 billion takeover offer was blocked by the central government in March for competition reasons, he notes.
With its attraction as a potential acquisition target diminishing, other major investors could follow suit and pull out of the company, analysts said.
"(Another cornerstone investor) Danone could very likely sell its stake in the juice maker too," said Francis Lun, general manager at Fulbright Securities Ltd.
A Financial Times report said yesterday that Warburg Pincus had ended its investment in Huiyuan, becoming the first big stakeholder to pull out of the company after Coca-Cola's takeover offer was blocked.
Warburg Pincus has forgone an option to swap its convertible bonds for a 7 percent stake in Huiyuan and sold the bonds through Royal Bank of Scotland into the market, the report quoted sources familiar with the matter as saying.
French food-products maker Danone holds a 23 percent stake in Huiyuan, making it the second largest shareholder of the juice maker while Zhu Xinli, founder and chairman of Huiyuan, owns 36 percent of the company.
"The best way for Danone to unload its stake in Huiyuan is to sell it to other private equity funds. It will be hard for the French foodmaker to dispose of its stake in the market, given the size of the stake," Lun said.
Danone and Warburg Pincus made cornerstone investments in Huiyuan just months ahead of the juice maker's initial public offering in Hong Kong in February 2007.
Tanrich Securities' Kwok said this was a good time for Warburg Pincus to encash its investment in Huiyuan as share prices have rallied significantly from the trough in early March.
"There are many good investments in the market now. With the cash raised from its divestment of Huiyuan stake, it could prospect other more promising opportunities," he said.
(HK Edition 06/10/2009 page4)