SABMiller prepares to outflank Anheuser for Harbin

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The Independent Online

SABMiller, the London-based international brewer, is preparing a dramatic takeover bid for Harbin Brewery, China's fourth biggest beer business, valuing the company at about HK$3.7bn (£271m).

The move has been forced on SABMiller, which already owns 29.4 per cent of Harbin, after it emerged on Sunday that the big US brewer Anheuser-Busch had acquired a 29 per cent stake of its own in Harbin.

The highly aggressive move by Anheuser has set up a head-to-head battle for control of the remaining 41.6 per cent of Harbin, run by Peter Lo, the chief executive, which is traded on the Hong Kong stock market.

SABMiller is understood to be considering its options for a full bid for Harbin after the weekend's events, which represent a step-change in the already intense battle for control of China's enormous beer market.

A move by SABMiller to launch a public offer for Harbin could trigger a rival bid by Anheuser as both beer groups desperately try to cement their positions in one of the world's most important beer markets.

SABMiller is thought unlikely to want to give up its influence over Harbin. It has two seats on the company's board and sees it as a key strategic fit with its other Chinese brewing business, a joint venture called CRE Beverage, which is China's second biggest brewer.

Both CRE and Harbin are strong in the north-east of China and SABMiller is committed to a long-term presence in the country.

Anheuser has a 9.9 per cent stake in Tsingtao Brewery, China's biggest beer company with a 13 per cent market share, and is keen to put a brake on SABMiller's expansion in China.

Anheuser has an agreement to raise its stake in Tsingtao to 27 per cent over the next seven years in a deal worth $182m. It may wish to ultimately combine China's first and fourth largest brewing companies to give it the sort of dominance it enjoys in its domestic market.

Alternatively, Anheuser may end up simply enjoying a quick profit on its opportunistic investment in Harbin, although this would be out of character for the St Louis-based company known for its long-term and generally cautious outlook.

Patrick Stokes, Anheuser's chief executive, said: "Harbin fits our strategy of investing in leading companies in growth markets like China with good volume and profit growth potential."

A spokeswoman for SABMiller said: "We have learned about this [the Anheuser investment] in the last 24 hours and we are waiting to understand more about the situation."

Anheuser and SABMiller have become increasingly fierce rivals since SAB, formerly South African Breweries, acquired Miller, the number two US beer maker behind Anheuser.

Yesterday a spokesman for Anheuser refused to add to its statement on Sunday announcing its Harbin investment.

It is understood to have bought its stake from an investment group, which in turn acquired the stake from the local Harbin government last month.

SABMiller, which has been transformed into an international brewer under Graham Mackay, its chief executive, has not fought shy of aggressive takeover bids in the past. It has been willing to pay top prices for strategically important assets in its bid to rival Anheuser for global dominance.

This is the first time, however, Mr Mackay has come into direct competition for a business with Anheuser, which has famously deep pockets and will push SABMiller hard.