The Dutch brewing giant Heineken said today that it is finalising arrangements to combine its Chinese operations with its associate company Asia Pacific Breweries (APB) as of 1 April 2004.

The new entity will be called Heineken Asia Pacific Breweries China (HAPBC), and it will be responsible for the production and marketing of beer and other strategic activities such as investments, mergers and acquisitions in China for Heineken. HAPBC will start brewing Heineken beer locally for the Chinese market as per the same date.

HAPBC, as well as being the 97% shareholder of the Shanghai Asia Pacific Brewery, intends to acquire the entire registered capital of Hainan Asia Pacific Brewery Co (HAPCO) from APB on the 31st March.
The cost of the acquisition will be equal to the consolidated audited net tangible asset value of HAPCO as at 31 March 2004. HAPCO operates a brewery on the island of Hainan.

HAPBC will also acquire Heineken Trading (Shanghai) Co (HTSC) from Heineken at an amount equal to the consolidated audited net tangible asset value of HTSC as at 31 March 2004.

As at 30 September 2003, the consolidated unaudited net tangible asset value of HTSC is RMB57m (€5.5m). The estimated net turnover of HTSC for the year ended 31 December 2003 is RMB321m (€31m).

Upon completion of the transactions, APB and its parent company Asia Pacific Investment Pte Ltd (APIPL) will each hold 50% of HAPBC. The indirect effective economic interest in HAPBC will be: Heineken 46.1% and Fraser and Neave 43.9%.

"HAPBC will benefit through a unified strategy and management approach. It will be able to operate more efficiently and effectively as commercial activities for the Heineken and APB brands in the Chinese market can be combined to realize potential cost synergies in marketing and distribution," Heineken said in a statement.

The company also said that Heineken beer will be locally produced to better fulfill the growing demand for Heineken beer in China and improving capacity utilization and that resources can be combined to provide a leaner and more effective management of the various companies.