UK: SABMiller adds to China footprint with acquisitions
SABMiller is to up its presence in China with the acquisition of four breweries.
The London-based company confirmed today (24 August) that China Resources Snow Breweries, its joint venture in the country with China Resources Enterprise, will acquire two breweries in Liaoning Province, one in Anhui and one in Hunan. The four transactions will cost the company US$79m, which includes a cash consideration of $57m.
CR Snow has agreed to acquire an 80% equity interest in Liaoning Yalujiang Brewery Company and the brewing assets of Huludao Juhua Brewery Company through a joint venture in which it will own an 85% equity interest. It is also acquiring the brewing assets of Anhui Wanpi Brewery Company and a 100% equity interest in Hunan Xinghua Brewery Company. SABMiller said that all four breweries will receive "enhanced investment" in their facilities to bring them up to CR Snow's production standards.
As the leading brewer in the north-east province of Liaoning, where it already has eight breweries, CR Snow has total production capacity of over 11m hectolitres, although the existing plants are close to full capacity. The addition of Yalujiang Brewery at Dandong in south-eastern Liaoning and Juhua Brewery in the west of the province will provide additional production capacity of 2.7m hectolitres.
Wanpi Brewery, meanwhile, will boost CR Snow's production capacity there to around 14m hectolitres. It will also generate synergies with CR Snow's existing breweries at Bengbu and Chuzhou. Currently, CR Snow is the largest brewer in the province with seven breweries.
Xinghua Brewery is situated at Yueyang in the north-eastern region of Hunan. At present, CR Snow does not have any plants in Hunan. The current annual production capacity of the brewery is 1.2m hectolitres and it has the dominant market share in Yueyang.
"The acquisitions reflect our commitment to accelerate the national presence of Snow," said André Parker, managing director of SABMiller Africa & Asia. "Upon conclusion, they will add a total of about 5m hectolitres to CR Snow's current production capacity of close to 90m hectolitres. The average attributable investment cost of around US$18 per hectolitre, is very reasonable; reflecting our ability to expand profitably at low cost."
Mark Chen, managing director of China Resources Enterprise added: "The acquisitions in Liaoning and Anhui will generate synergies with our existing breweries, refine the distribution network and strengthen our leading position in the provinces. In Hunan, the acquisition will provide a solid platform for our national brand Snow to expand and concurrently complement our existing operation in Wuhan given its close proximity."
CRE has a 51% interest in China Resources Snow Breweries while SABMiller Asia holds the remaining 49% interest. The joint venture operates more than 50 breweries in the Chinese mainland with total beer sales volume of about 5.3m kilolitres in 2006.
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