Interbrew, the Belgian beer giant, has signed an agreement with the Zhu Jiang Brewery, of Guangdong, China that could give it up to 25% of the brewer once it has floated.

The two companies signed a Memorandum of Understanding which offers Interbrew the opportunity to become one of the promoters of Zhu Jiang Brewery's transformation into a Joint Stock Company. Zhu Jiang Brewery is preparing for an IPO in 2003.

"This could result in Interbrew taking up to 25% in the Zhu Jiang Joint Stock Company, subject to final agreement on price and related conditions," Interbrew said in a statement.

The IPO aims to raise 1 billion yuan (US$120.7m). Zhujiang Beer is the only remaining unlisted major Chinese brewery, while its close rivals Shandong-based Tsingtao and Beijing-based Yanjing floated in 1993 and 1997 respectively. As the third largest beer brewer Zhu Jiang saw sales volumes in 2001 of 7.5 million hectolitres. The Zhu Jiang brewery is the market leader in the Guangdong Province with an approximate 50% market share and its leading brands are Zhu Jiang, Supra and Zhu Jiang Draught beer. It is also the most profitable brewery by hectolitre sold in China.

Since its creation in 1984, the Zhu Jiang brewery and Interbrew have built a strong relationship. Interbrew provided the brewery with technical expertise during the first and second phase of the construction of the brewery (in 1984 and 1986 respectively). In the past 18 years, many Chinese professionals from the Zhu Jiang brewery have participated in internships with Interbrew in Belgium and benefited from the transfer of technical brewing know-how.

“Interbrew is pleased to continue its relationship with Zhu Jiang by drawing on its recently gained experiences through its own IPO in December 2000.” said Hugo Powell, Chief Executive Officer of Interbrew.