The much mooted expansion of Anheuser-Busch's relationship with the leading Chinese brewer Tsingtao Brewery could be tied up by the end of the year, a Tsingtao official was reported as saying today.

The timeframe is well ahead of initial expectations, which had a target of July 2003 for a signed deal.

"Given negotiations on the tie-up are proceeding very smoothly, a deal is expected to be signed within this year," said Zhang Ruixiang, a spokesman for Tsingtao Brewery.

Tsingtao Chairman Li Guirong flew to Beijing earlier this week to further the talks with an Anheuser-Busch team based there, he said, adding that Li was in the United States with Anheuser-Busch last month.

Earlier this year the two companies announced that they had signed a deal to form a strategic partnership. Details of the deal were not revealed but reports suggest that it will include the US brewing giant, Anheuser-Busch, raising its stake in the Chinese brewery, Tsingtao, from 5% to 27%.

Anheuser-Busch is expected to pay around HK$1.2 billion to purchase the additional shares, based on an offer price of HK$4.20 per share, representing around a HK$1 premium to the current trading price. If the deal goes through it would make Anheuser-Busch the largest shareholder in the Chinese company after the state-run Tsingtao State-Owned Assets Management Bureau.