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Investors in China Resources Beer (Holdings) Co Ltd toasted its
bargain price for control of the world's No. 1-selling beer by
volume, with shares in the Chinese state-backed company rising
25 percent to a five-year high.
Wednesday's deal to sell SABMiller's 49 percent CR Snow stake
was widely anticipated but came sooner than expected for some.
It is the latest in a series of divestments aimed at getting
approval for SABMiller's $100 billion-plus takeover by AB InBev,
the largest deal in consumer goods history.
AB InBev has already struck deals to sell SABMiller's stake in
U.S. joint venture MillerCoors to Molson Coors Brewing and its
Peroni and Grolsch brands to Japan's Asahi Group Holdings.
While the Snow divestiture shows AB InBev's determination to
push ahead with its mega-deal, it came at a cost, analysts said.
"We think that the 49 percent stake could have attracted a
higher price if offered to other brewers on the open market, but
assume that ABI's negotiations with the Chinese regulators ...
ended up precluding this course of action," Canaccord Genuity
analysts, who had valued the stake at around $5 billion, said.
Jeremy Yeo, an analyst at Mizuho Securities Asia, said the deal
was positive for CR Beer's shareholders as he had been expecting
a price tag of $3 billion to $3.5 billion.
The deal, which would give China Resources full control of the
largest brewer in China with a 30 percent market share, is
contingent on the closing of the AB InBev-SABMiller deal, which
is expected later this year.
China Resources plans to use a combination of funding options
including debt and/or equity financing to pay cash.
Shares in China Resources lost ground this year after the stock
was dropped from the main constituents in the Hang Seng Index
following a regular review.
China Resources accounted for 23.3 percent of the beer market in
China in 2014, with Tsingtao Brewery <600600.SS> <0168.HK>
second at 18.4 percent, according to Euromonitor International.
China Resources Beer changed its name from China Resources
Enterprise after it announced a plan in April to sell all its
non-beer assets to controlling shareholder China Resources
(Holdings) Co for $3.6 billion.
CR Snow had a net asset value of HK$27.2 billion ($3.5 billion)
at the end of last year, the statement said. Its net profit fell
21 percent to HK$1.51 billion in 2014 from a year earlier.
Shares in AB InBev and SABMiller were little changed.
($1 = 7.7744 Hong Kong dollars)
(Editing by Edwina Gibbs and Alexander Smith)
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