SAB set to make more acquisitions in China

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The Independent Online

South African Breweries is expected to announce further expansion in China this week with the acquisition of two breweries in central China and the north-eastern province of Jilin. An announcement could be made as early as today with an expected value of "tens of millions of dollars".

The deals are part of SAB's strategy of seeking "in-fill" acquisitions in China where it has been establishing regional strongholds since 1996.

In October this year it announced a new joint venture in China called Blue Sword Breweries in the central Sichuan province, with an investment of $64m. That deal included 10 breweries and will give the venture an 85 per cent share of all beer sold in the province of 80 million inhabitants.

SAB's Chinese operations have been affected by tough competition and currency fluctuations. With 98 per cent of the beer market in its native South Africa, SAB has been attempting to expand into emerging markets such as India and Latin America, where it signed a $537m deal in Honduras and El Salvador last week.

The deals come as SAB attempts to shrug off the events of last week when documents related to a possible takeover bid for SAB by Interbrew were widely leaked in the press.

Interbrew, maker of Stella Artois lager, is conducting an investigation into the source of the leaks but SAB is attempting to put the matter behind it.

Graham Mackay, SAB's chief executive, has flown to the United States for institutional meetings this week before moving on to South Africa.

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