Chinese drinks maker Wahaha accuses Danone of attempting hostile takeover

Chinese beverage maker Wahaha has accused its French joint venture partner Group Danone SA of attempting a hostile takeover in the country's latest skirmish over foreign acquisitions.

Wahaha Group has rejected a plan by Danone to buy out remaining assets in their joint venture for 4 billion yuan (US$517 million; EUR387 million), Wahaha's chairman Zong Qinghou said in an interview broadcast online by Sina.com, a Chinese Web portal.

Danone holds a 51 percent stake in the joint venture, Hangzhou Wahaha Group Corp., with local government departments holding other major shares.

State media widely reported the interview Tuesday, portraying Wahaha as an embattled target defending Chinese national interests. Disputes over foreign acquisitions of major companies have surged in recent months, causing a number of major deals to be delayed or scaled back.

Danone, a maker of dairy products, snack foods and bottled water, did not comment directly about the potential takeover attempt, but issued a statement in Chinese saying that it was seeking to resolve the conflict with Wahaha through "business negotiations."

The statement said Zong's comments were his own personal views and that they were "not completely in line with the facts."

"Group Danone has always been supportive of China and ... will continue to support China's efforts to build up local brand competitiveness," the statement said.

A Danone spokesman did not immediately respond to requests for comment. Staff at Wahaha's headquarters in Hangzhou, a scenic city west of Shanghai, said Zong and the company spokesman were not available, and refused comment.

In the online broadcast with Sina.com, held Sunday, Zong complained that the terms of Wahaha's joint venture agreement with Danone, set in 1996, were unequal because they prevent the Chinese company from producing any competing products while imposing no such limits on Danone.

The companies have five joint ventures. Under their 50-year contract, Wahaha is not allowed to make products that compete with those joint ventures or to use the Wahaha brand without Danone's consent, according to state media reports.

"You limit me from producing competing products but put no limits on yourself, and meanwhile you acquire many brands that compete with us," Zong said.

"To be fair, a contract cannot hurt the interests of just one side," he said, according to a transcript of the interview on Sina.com's Web site.

Danone has a joint venture with China's biggest milk producer, China Mengniu Dairy Co., to make yoghurt. It also has stakes in Shanghai-based Bright Dairy & Food Co. and major juice producer China Huiyuan Juice Group.