LONDON (CNNfn) - The French government Wednesday said it would block Coca-Cola's $735 million revised bid for Pernod-Ricard's carbonated soft drinks arm, Orangina.
Finance Minister Christian Sautter confirmed he would refuse Coke's second attempt to buy the unit following a negative ruling by the country's competition watchdog. "The modifications Coca-Cola proposed to make [to its offer] were inadequate," Sautter said.
The authorities blocked Coke's original 5 billion French franc ($812 million) bid a year ago amid concerns the acquisition would give the world's biggest soft drinks company a monopoly in the French market.
Rival Pepsi-Cola, a unit of PepsiCo (PEP), had complained that the sale of Orangina would squeeze the Purchase, N.Y.-based company out of the French market.
In an attempt to get regulatory clearance, Coke then revised its offer, by excluding Orangina's distribution system from its bid. A deal would have boosted Coke's share of the French soft drinks market from 60 to 70 percent.
Pernod's stock slumped 4.6 percent at the close to 58.20 euros in Paris. The bid was worth around a quarter of the French drink group's market capitalization.
Unions attacked the decision, after they had won job guarantees from Coke for backing its bid for Orangina. Employees now fear widescale job losses if Pernod-Ricard decides to restructure the unit.
In a statement, Pernod-Ricard criticized the decision. "We share the disappointment of all those involved with Orangina at this decision. It impairs our legitimate ambitions to develop in the global market and will harm the national economy," the company said.
Coke said it would now walk away from the deal, having spent some two-and-a-half years trying to get approval. That could yet leave the door open for rival Pepsi, although Pernod-Ricard said it had no other potential partner in mind "at the moment."
The decision rounds out a pretty bad year for Coke in Europe, where a major contamination scare in Belgium and France hurt third-quarter earnings.
-- from staff and wire reports