CHINA: Another Chinese brewer for InBev
InBev said today (23 January) that it will immediately acquire a 39.48% stake in Fujian Sedrin from the state, with the remaining 60.52% held by various other shareholders being bought up between now and the end of 2007.
"This transaction is a very significant step in our strategy and strongly reinforces both our leadership position and footprint in southeast China," said Carlos Brito, InBev CEO. "Fujian Sedrin is one of the most profitable Chinese brewers and in recent years has achieved an EBITDA margin in excess of 30%. The Sedrin brand will be one of InBev's top five selling brands globally by volume with significant potential for growth and expansion."
Speculation late last year suggested that the Chinese brewer had held talks with major international groups including Heineken and Anheuser-Busch to sell a controlling stake.
InBev's purchase represents an implied 2005 EV/EBITDA multiple of 13 times. The company said that it expects the acquisition to be earnings accretive to operating results in year one, with Return On Invested Capital (ROIC)-Weighted Average Cost of Capital (WACC) breaking even in four years.
Fujian Sedrin is the leading brewer in Fujian Province with a market share of approximately 45% in 2004. It also had an approximately 18% market share in Jiangxi Province in 2004. Fujian Sedrin's portfolio includes Sedrin Prime Beer, Sedrin Tiandi, Sedrin Pure Draft, and Sedrin Ice Beer in the local premium segment and core lagers such as Sedrin Jingpin and Sedrin Teshuang.
Fujian Province is situated on China's eastern coast and has a population of approximately 35m.
Late last week, InBev confirmed that it had upped its stake in Zhujiang Beer, located in the southern Guangdong province, from 24% to 25.31%.
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