Coca-Cola has dramatically stepped up its plans for soft-drinks dominance in Asia by making a $2.5 billion (£1.4 billion) takeover offer for China Huiyuan, a household name in the People’s Republic and the country’s largest maker of fruit juices.

If it overcomes a series of potentially troublesome regulatory hurdles, the American group’s bid would be the biggest takeover of a Chinese company by a foreign business.

The success of China Huiyuan, which is only 16 years old, illustrates its country’s new and voracious thirst for fruit juice. Driven in part by health concerns and by the growing wealth of China’s middle class, fruit juice sales soared by 15 per cent last year and are expected to repeat the feat this year.

The Coca-Cola bid breaks what had become something of a drought in merger and acquisition activity in China, where the State’s dominance of the corporate sector has proved to be an insurmountable obstacle to potential buyers. Outside interest in consumer-facing industries in China has also diminished as domestic companies’ margins have been squeezed by inflation and frenetic competition.

A deal would also be the first serious international transaction to test China’s anti-monopoly law, which came into effect a year ago but has yet to demonstrate the true muscle of the regulators. The sight of a household name such as China Huiyuan falling into the hands of foreigners is likely to add an emotional and nationalistic angle to the regulators’ decision, analysts said.

Coca-Cola already has a strong position at the lower end of the juice-drink market in China; Huiyuan’s areas of dominance are in the pure fruit juice and nectar markets, of which it has about 40 per cent. The American group could use the Huiyuan brand to enhance its push into South-East Asia and India, where it continues to fight fiercely with PepsiCo, its great rival.

Lawrence Chor, an analyst for Tai Fook Securities, said: “The move is a big surprise to the market and the offer is super-generous. It’s very possible Coca-Cola will leverage the Huiyuan brand, acquire other Chinese juice makers, then boost their output for export.”

Juice drinks — diluted concoctions based on fruit concentrates — are the clear favourite in China and represent two thirds of all sales in the “fruit juice” market. That is the area in which a combined Coca-Cola and Huiyuan group would be most potent, controlling nearly 40 per cent of the market.

However, Huiyuan’s shares have suffered in recent months from a series of downgrades by analysts, who worry that the company has placed too much expensive marketing emphasis on kiwi juice — a “niche flavour” whose mass-market prospects are doubtful.

Coca-Cola’s unexpected bid, which placed a surprisingly high premium of 195 per cent on Huiyuan’s closing price last week, rescued shares in the Beijing-based company from a nearly unbroken bear run in which they have been battered for almost a year and have lost half their value. The shares, which are traded on the Hong Kong exchange, rose by 170 per cent after news of the offer.

However, in a brief note to investors, Merrill Lynch analysts gave warning that the need for regulatory approval from China’s Ministry of Commerce made it very difficult to tell when and whether the deal would be approved.

The deal depends on irrevocable undertakings by Huiyuan’s three largest shareholders, which between them control 66 per cent of the company. Danone, the French food group, is among the three and holds a stake of just under 23 per cent.

Drinks cabinet

— Low-concentration drinks, which contain 10 per cent pure fruit juice or less, are the biggest sellers in China’s juice market, accounting for 70 per cent of sales

— China Huiyuan is one of the country’s best-known juice brands and generated sales of 2.7 billion yuan (£222 million) last year

— Huiyuan has 10.3 per cent of a Chinese fruit juice market that grew 15 per cent last year to £1.1 billion. It is followed by Coca-Cola, which has a 9.7 per cent market share

— China is Coca-Cola’s fourth-largest market. The company has a 15.5 per cent share of China’s soft-drinks market — twice that of PepsiCo

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