COMMENT: Harbin bid hoo-hah
Anheuser-Busch's surprise acquisition of a 29% stake in the Chinese brewer Harbin may force SABMiller to gain full control of the company. By making this competitive acquisition, however, Anheuser-Busch is risking its strategic alliance with the number one Chinese brewer, Tsingtao.
SABMiller, the London-based international brewer, is preparing a takeover bid for Harbin Brewery, China's fourth biggest beer company, following Anheuser-Busch's surprise move to acquire a 29% stake in the Chinese brewer.
SABMiller already owns 29.4% of Harbin - nearing the 30% threshold over which shareholders are forced to launch a takeover offer for all remaining shares, under Hong Kong stock market rules.
Both beer groups are trying to cement their position in what is potentially one of the world's largest beer markets. Speculation has been mounting that the Chinese brewer might form a new alliance with Anheuser, similar to the existing deal Anheuser has with Tsingtao, or that the US brewing company might be planning to take over Harbin completely.
SABMiller is unlikely to forgo its stake as the company sees Harbin as a strategic fit with its other Chinese brewing business, CRE Beverage, which is China's second biggest brewer. As the fourth largest Chinese brewer, Harbin has a particularly strong market presence in the Northeastern provinces. The company is listed on the Hong Kong Stock Exchange and is valued at approximately HK$3.7 billion (GBP271 million).
Although Anheuser's strategic move has outwitted SABMiller, Anheuser's stake in Harbin could threaten its mutually exclusive strategic alliance with Tsingtao Brewery, China's biggest beer company, in which Anheuser has a 9.9% stake.
Anheuser has the financial resources to disrupt SABMiller's development in the Chinese beer market and in the process could even enjoy a quick profit on its opportunistic investment in Harbin.
For SABMiller, however, it is absolutely essential to secure Harbin's ownership. While the potential of the Chinese beer market is enormous, opportunities to form alliances with established beer brewers in this market are scarce. SABMiller cannot afford to miss out on Harbin. Failing to acquire the Chinese brewer would be a major setback in its quest to develop a stronghold in the Chinese market and it is doubtful whether the company's position in China would ever recover from this missed opportunity.
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