Category Archives: China Acquisitions Mergers

Diageo confirms aim to up Quanxing Group holding

Source: Just-Drinks By Olly Wehring 25 March 2013

The head of Diageo has reiterated the company’s preference to acquire a larger stake in its Chinese JV that controls the ShuiJingFang baijiu producer in the country. Continue reading

Carlsberg Offers to Raise Stake in Chongqing Brewery

Source: Bloomberg News By Clementine Fletcher

Carlsberg A/S (CARLA), the world’s fourth- biggest brewer, will offer to buy as much as 2.9 billion yuan ($466 million) of shares in Chongqing Brewery Co. (600132) as it seeks to tighten its grip on the Chinese beermaker.

Carlsberg, which already owns a 29.7 percent stake in the Chongqing municipality-based brewer, will offer 20 yuan a share for a further 30 percent stake in the maker of Shancheng beer, it said yesterday in a statement. The deal will add to earnings per share in the first year after completion.

“Strategically, we believe the deal makes a lot of sense,” Trevor Stirling, an an analyst at Sanford C. Bernstein in London, wrote in a note to clients dated yesterday. “Asia is key to Carlsberg’s long-term growth story; in particular, China is key to Carlsberg’s footprint in Asia, especially western China, including Chongqing.”

Carlsberg, which gets about 14 percent of its sales from Asia, according to data compiled by Bloomberg, is seeking to expand its operations outside the slow-growth markets of northern and western Europe. The brewer said on Feb. 1 that it’s starting a new joint venture in Myanmar, after announcing a tie- up with Thailand’s Singha Corp. on Sept. 28. Carlsberg is the biggest brewer in Russia.

The Chongqing price is 15.7 times estimated earnings before interest, tax, amortization and depreciation, based on expected profits the first year after completion, Carlsberg said. The deal will be financed through existing facilities and may take as much as 12 months to complete.

Stockholder Sells

Chongqing Beer Group Co., which owns 20 percent of Chongqing Brewery, has committed to tender all its shares at the proposed price. If the bid is oversubscribed, Carlsberg will buy any remaining shares held by Chongqing Beer Group.

“We believe that through closer cooperation with Carlsberg, the performance of this large-scale beer business will be significantly enhanced,” Joergen Buhl Rasmussen, Copenhagen-based Carlsberg’s chief executive officer, said in the statement. “Our Asian business is very important for our long-term growth strategy.”

Carlsberg’s shares rose 1.1 percent to close at 594.50 kroner in Copenhagen yesterday, giving it a market value of 91.7 billion kroner ($16 billion). Chongqing’s shares, halted since Feb. 25 pending this announcement, will resume trading today, according to a statement issued via the Shanghai stock exchange yesterday.

Chongqing is strong in western China, including Chongqing municipality, and on the east coast, Ian Shackleton, an analyst at Nomura in London, wrote in a note dated yesterday.

“Although Carlsberg will need further deals to become truly national like market leader China Snow, majority control of Chongqing is a useful building block towards this goal,” Shackleton said.

SABMiller Expands in China, Buying Kingway Beer

Source: Bloomberg News By Vinicy Chan, Fox Hu & Clementine Fletcher

SABMiller Plc (SAB)’s joint venture in China agreed to pay HK$6.6 billion ($851 million) for beermaking assets from Kingway (124) Brewery Holdings Ltd. to boost its share of the world’s biggest market for the beverage.

China Resources Snow Breweries Ltd., which SABMiller co- owns with government-backed China Resources Enterprise Ltd. (291), will acquire Kingway’s production and sales business, including seven breweries, it said yesterday in a statement. The transaction price includes about $33 million worth of loans.

“Kingway is currently loss-making, but we believe we made a right decision,” Chen Lang, chairman of China Resources Enterprise, told reporters in Hong Kong. “About 50 of our 80 breweries came through acquisitions. We have a track record of turning things around in three to five years.”

China Resources, the maker of Snow beer, struck a deal after Kingway stumbled in an earlier attempt to sell the business. The company had drawn an offer from Anheuser-Busch InBev NV (ABI) last year, and Beijing Yanjing Brewery Co. was near an agreement to buy the assets in April, people with knowledge of the matter said at the time.

Kingway, based in Guangdong, put the assets up for sale as it lost market share in its home province to competitors including Tsingtao Brewery Co. The company said last week it expects to report a loss for the second half of 2012, after recording losses of HK$101.6 million in the first six months. The stock closed 1.5 percent lower at HK$3.28, giving the company a market value of HK$5.61 billion.

Strategic Importance

The purchase by China Resources “is an important strategic transaction,” analysts at Barclays led by Simon Hales said in a note. “SAB’s market-leading position in China continues to offer investor upside optionality in the long-run.”

SABMiller shares rose as much as 1.6 percent to the highest price on record in London and were up 1 percent at 3:12 p.m. local time yesterday, giving the world’s second-biggest brewer a market value of almost 51 billion pounds ($80.1 billion).

If the joint venture is able to increase earnings per hectoliter of beer in China to just less than half of group earnings by that measure, it would be worth 160 pence per SABMiller share, the Barclays analysts said. About half the price of the Kingway purchase is a premium versus building new breweries, reflecting the potential value of the beer brand and Kingway’s “strong regional route-to-market capabilities,” they said.

Active Acquisitions

Brewers like SABMiller are seeking to expand in faster- growing emerging markets as sluggish economies and government cost-cutting measures offset improvements in the beer market in Europe. AB InBev, the world’s biggest brewer, agreed to buy the rest of Mexico’s Grupo Modelo SAB last year for $20.1 billion in the second-biggest beer deal of the last decade, while Heineken NV (HEIA) took control of its Asian joint venture for S$5.6 billion ($4.5 billion.)

“The Kingway acquisition appears to be rather expensive, considering Kingway’s assets and production capacity,” Anson Chan, a Hong Kong-based analyst at KGI Asia Ltd., said by phone. “It will not change the competition landscape in Guangdong, as Snow is likely to remain the number three brand in the region, lagging Tsingtao and Zhujiang Beer. I also don’t see much cost- saving synergy in the deal.”

China Resources’ Snow, the No. 1 beer brand in China, had a 22 percent market share last year, according to Euromonitor International, a London-based research firm. The transaction will add 14.5 million hectoliters of beer production capacity, SABMiller said.

Shares of China Resources fell 1.1 percent in Hong Kong yesterday before the announcement.

AB InBev buys Nanchang Asia Brewery in latest China acquisition

Source: Want China Times

Anheuser-Busch InBev has struck a deal to acquire Nanchang Asia Brewery to help it tap into middle and low-end markets in China, a source from the Belgium-based beer company has told the Chinese-language National Business Daily. Continue reading

Happy hour in Asia as global booze makers eye deals

Source: Reuters By Nandita Bose

(Reuters) – The biggest global alcohol companies are sizing up buyout and tie-up opportunities in China, India, South Korea and Vietnam, keen to profit from a $258 billion Asian market that is growing twice as fast as the rest of the world. Continue reading

Huafeng to Buy Oolong Tea Producer in China for HK$2.49 Billion

Source: Bloomberg News

Huafeng Group Holdings Ltd. (364), a Hong Kong-based fabric processor, agreed to pay HK$2.49 billion ($321 million) to buy an oolong tea producer in China from people connected to its controlling shareholder. Continue reading

Modern Dairy Jumps as Mengniu Confirms Talks

Source: Bloomberg News By Vinicy Chan

China Modern Dairy Holdings Ltd. (1117) surged to an almost 20-month high after China Mengniu Dairy Co. (2319), the country’s biggest dairy producer, confirmed it has been in talks to acquire the supplier. Continue reading