Huiyuan gutted its own sales force for a Coca-Cola deal that regulators blocked

Huiyuan was China's best-known juice brand. In September 2008 its founder agreed to sell the company to Coca-Cola for about $2.4 billion (roughly HK$17.9 billion) — at the time the largest foreign buyout of a Chinese company. To prepare for life under Coca-Cola, Huiyuan dismantled much of its own sales and distribution network, expecting Coca-Cola's system to replace it.

The deal needed approval from China's Ministry of Commerce under the country's new Anti-Monopoly Law, which had taken effect only weeks earlier, in August 2008. After a six-month review, the Ministry prohibited the acquisition on 18 March 2009 — the first merger it had blocked under the new law. Coca-Cola said it respected the decision.

Huiyuan was left in a strategic vacuum. It had hollowed out the capabilities it would need to compete on its own, and the deal meant to replace them was gone. Its shares fell 58% in three trading days. In 2009 it posted its first annual loss, about ¥99 million, and then lost money for seven consecutive years.

The decline proved terminal. By 2017 Huiyuan's debts had reached about ¥11.4 billion against assets of roughly ¥4.5 billion; billions in assets were frozen, and the shares were suspended from the Hong Kong exchange in 2018 and later delisted. The case is now a textbook warning on regulatory risk in M&A: a target that gives up its own strengths in anticipation of a deal is destroyed if the deal does not close.