China Resources and SABMiller don’t get Heineken’s stake in Kingway Brewery
Let this be a warning to all armchair strategists: the much discussed tie-up between AB-InBev and SABMiller could run into troubles in China if the latest deal is anything to go by. At the beginning of April 2011, Kingway Brewery announced that its controlling shareholder GDH Ltd has exercised its right to buy the 21.37 percent stake currently held by a Heineken joint venture.
In a filing to the Hong Kong bourse, Kingway said the state-owned GDH, a wholly-owned subsidiary of Guangdong Holdings Ltd, would buy the stake for 1.08 billion yuan (USD 164.94 million), increasing its holding in the Chinese brewer to 73.82 percent. That way Kingway Brewery will remain in Chinese hands. GDH is owned by an investment arm of the Guangdong provincial government.
Media say it wasn’t immediately clear if GDH will need to make a mandatory general offer for all Kingway shares it doesn’t already own as per Hong Kong stock exchange regulations.
Kingway Brewery is China’s eighth-biggest brewer.
Heineken had said they wanted out in order to focus on the growth of premium brands in China. The sale marks the end of a seven-year tie-up between Kingway and Heineken, which first bought a stake in Kingway in 2004 as a strategic investment.
Last month, China Resources Enterprise, in which SABMiller has a minority shareholding, said it wanted to buy Heineken’s stake in Kingway Brewery for about USD 161 million.
