DealZone

The Coca-Cola Co – the world’s largest beverage producer – has been thinking and acting more like a venture capital firm over the last few years, as it attempts to find new ways to increase profits and stay ahead of the competition,  according to a Reuters exclusive.

Coke’s Venturing and Emerging Brands unit, dubbed VEB, was founded in 2007 with the purpose of investing in independent brands, like Honest Tea and Zico coconut water. VEB president Deryck van Rensburg told Reuters the venture arm currently receives three to four unsolicited pitches per week from entrepreneurs. Van Rensburg added it was “not inconceivable” for it to work in other places, such as China, where there is “a huge entrepreneurial community.”

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Pharmaceutical company GlaxoSmithKline is also looking at smaller strategic acquisitions. Glaxo CEO Andrew Witty told French daily La Tribune: “We may do small targeted deals, but nothing big. We will not do a large transaction in pharma nor in generics.”

For a Big Pharma company like Glaxo small is a relative term, as it is reportedly kicking the tires on a potential acquisition of U.S. biotech firm Genzyme, along with rival Sanofi-Aventis. The rumored deal last week sent Genzyme’s market value soaring 15 percent to $16.7 billion.

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The trend of private equity firms buying up consumer-oriented food companies continued with the announcement that Lion Capital intends to purchase French frozen-food firm Picard Surgeles from rival BC Partners. According to Reuters, the deal would be France’s biggest leveraged buyout since the collapse of Lehman Brothers. The Reuters story also quoted “three people familiar with the matter” that Picard had a pre-deal value of about 1.5 billion euros ($1.9 billion).

Over the last few months, as Pepsi worked out its deal to buy its main bottlers, Coca-Cola said it wasn’t interested in such a deal. Well you can’t keep a good idea down and today Coke, which once liked to be known as “the real thing,” unveiled plans to buy the bottler’s North American business.

The deal includes about $3.2 billion in Coke’s equity in CCE and the assumption of nearly $9 billion in debt. PepsiCo is due to close the $7.8 billion purchase of its largest bottlers, Pepsi Bottling Group and PepsiAmericas, perhaps within the next 24 hours. Coke expects the transactions to add to earnings by 2012. It also expects cost savings of $350 million over four years, with 70 percent of the savings realized by the end of 2012. It expects to take a related one-time charge of $425 million over three years, but will not need to use any additional borrowings.

“Coke couldn’t sit back while Pepsi delivered $600 million (or more) in synergies for reinvestment and then transformed its U.S. business model,” said ConsumerEdge Research analyst Bill Pecoriello, who suggested Coke may not be interested in holding onto the asset for the long haul.

Is it a sign of recovery that cross-Pacific deals are making a comeback? Certainly the mighty dollar makes overseas assets cheap, and foreign governments are probably more willing to create less friction on inflows with investment markets quiet.

In a deal that only a month ago was dead in the water, with a big protectionist steak through the heart, Coca-Cola’s bid to get into the Chinese market appears to be coming back to life. The company is now reported to be holding informal talks with China Huiyuan Juice to weigh partnership options after the $2.4 billion deal — the largest-ever buyout of a Chinese company by a foreign rival – was scuppered.

In South Korea, antitrust officials have cleared the way for eBay to buy Gmarket, its key competitor in the country. The deal, worth up to $1.2 billion, is seen a key driver of growth in the region for eBay. Nasdaq-listed Gmarket is the biggest South Korean operator of customer-to-customer marketplaces and has more than 10 million registered users in the country. When combined, Gmarket and eBay’s South Korean unit will have an 87.5 percent share of the South Korean customer-to-customer market and 36.4 percent of the entire domestic online shopping market.

Coke pulled off the single largest takeover in Chinese history overnight, offering to buy juice maker Huiyuan for three times what the company was worth. Braving a notoriously difficult foreign M&A environment, where the state dominates the corporate sector and pumps out reams of regulatory red tape and where nationalistic pride often triggers protests when foreign firms gain influence over domestic firms. Since capitalism is good these days, that premium should go a long way toward suppressing any nationalistic distaste with the deal. Interesting to note that Chinese inbound corporate deals so far are up 30 percent from a year ago, to $15.3 billion.

Hedge fund manager Ospraie Management will close its flagship fund after it plunged 27 percent in August on losses in energy, mining and natural resources equity holdings, in one of the biggest ever closures of a commodities-focused hedge fund. The closure of the fund, announced by the firm’s founder Dwight Anderson in a letter to investors on Tuesday, could be more bad news for Lehman Brothers, which took a 20 percent stake in the hedge fund manager in 2005. One expert said the closure of the fund, which at the time of the letter’s writing had lost 38.59 percent this year, may also have played a role in bringing down U.S. stocks yesterday, which fell after initially climbing more than 1 percent. Lehman shares were down more than 3 percent in after-hours trading.

Other deals of the day:

* South Korea’s military savings fund would consider joining Korea Development Bank in a bid for Lehman Brothers if KDB made such an offer, as now appears a good time for U.S. investments, the fund’s chairman said.