Carlsberg keen to buy big in China
Ah, those heady deal fantasies. Just because the controlling Carlsberg Foundation said in October 2013 that it wants to be able to cut its stake in the Danish brewer to below 25 percent, which could open the door for a share issue (and more money to spend on acquisitions), commentators have already been outdoing each other in guesswork who Carlsberg would buy next. Some even went as far as saying that Carlsberg have set their eyes on the Chinese brewers Tsingtao and Yanjing and the Philippine brewer San Miguel. Could it be that these commentators, in their exuberance, have ignored the fact that Tsingtao and San Miguel already have foreign shareholders? Japan’s Asahi owns 20 percent of Tsingtao and Kirin controls 48 percent of San Miguel?
The Danish brewer’s controlling foundation signalled last month that it will give Carlsberg more leeway to pursue deals. The USD 15 billion company is eyeing about a half-dozen potential candidates, especially in Asia, media sources say.
Carlsberg holds a distant fourth place in the global beer market by volume behind AB-InBev, SABMiller and Heineken. The company’s revenue of DKK 67 billion (USD 12 billion) in 2012 was about half the revenue of its next-biggest rival Heineken.
The Carlsberg Foundation’s latest move could give the brewer a chance to make up lost ground in Asia, the region where volume growth is potentially highest. The brewer offered in March 2013 to buy shares in Chongqing Brewery to increase its stake to as much as 60 percent. Carlsberg has full ownership of breweries or joint ventures in seven Chinese provinces, mostly in the western part of the country.
For long, Yanjing and Tsingtao have been among the biggest brewers in China and attractive acquisition targets. But a takeover of Yanjing may be complicated by the Chinese government’s stake in the company while Tsingtao, with a market value of USD 10 billion, might be too big for Carlsberg to swallow.
Consolidation in the Asian beer market is already driving up brewers’ valuations, so there’s not only a risk of overpaying. The more realistic threat is that Carlsberg could be outdone by other keen and thirsty brewers with far deeper pockets.
