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A Controversial Acquisition

In: Doing Business with China

Author

Listed:
  • Stewart Hamilton

    (IMD)

  • Jinxuan Ann Zhang

Abstract

During the public dispute, Danone claimed that Wahaha had breached its noncompete obligation in the joint venture agreement. Yet, as Zong and Wahaha employees pointed out on different occasions, Danone formed partnerships with other major industry leaders in China, including the acquisition of Wahaha’s closest competitor Robust despite strong objections from Wahaha. The fierce price war waged by Robust in the purified water business following the takeover almost wiped out margins, hurting both companies financially. According to Danone, however, Zong was personally involved in their acquisition of Robust, and he had received “handsome” compensation (reportedly over US$1 million by means of share buyback from an overseas subsidiary1) from Danone for the “services” that he provided.

Suggested Citation

  • Stewart Hamilton & Jinxuan Ann Zhang, 2012. "A Controversial Acquisition," Palgrave Macmillan Books, in: Doing Business with China, chapter 5, pages 40-50, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-0-230-30545-8_6
    DOI: 10.1057/9780230305458_6
    as

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