AB-InBev Aquires Daxue Brewery Co

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Kirin Holdings Co. has disclosed that it plans to sell a 25% stake of northeast China-based Dalian Daxue Brewery Co. to Anheuser-Busch InBev (AB Inbev).

In this way, AB Inbev will fully acquire Daxue Brewery. According to the announcement of AB Inbev, it has inked the acquisition agreement with Daxue Brewery and Kirin (China) Investment Company Limited. The buyer and the seller have not disclosed the price of the deal.

This time, AB Inbev is understood to consolidate the presence in Liaoning, the fourth largest beer consumption province of China, via the move. Actually, AB Inbev has already had the upscale brand Budweiser and the mid-end brand Harbin Beer. After the acquisition this time, the foreign beer brewer is to enter the mid- and low-end beer market.

During recent years, those foreign beer giants have penetrated deeper into the Chinese beer market. In November 2010, Carlsberg acquired a 12.25% stake of the listed beer maker Chongqing Brewery Co. (600132.SH) and became the first largest shareholder of the southwest China-based beer company. Last May, Asahi Breweries took over a 19.99% that AB Inbev originally held in Tsingtao Brewery Co. (600600.SH). In addition, SABMiller as the world's second biggest beer producer gets a 49% stake in China Resources Breweries Co., Ltd., which is based in Beijing. Currently, Beijing Yanjing Brewery Co. (000729.SZ) has not invited any foreign investment yet.

Starting from last year, AB Inbev not only carried out the merger and acquisition actively, but also enlarged its own production capability. It has already had large projects in Sichuan, Henan and Liaoning.

These foreign players have brought opportunities and challenges to the beer market of China. On the one hand, those companies acquired by the foreign buyers can make further progress with the reliance on the capital strength, rich experience and advanced technology of the foreign companies. On the other hand, the country's indigenous beer brands will be in stiffer competition with the foreign giants.

With fewer resources available for M&A in the future, the restructuring in the beer industry will be carried out among those medium- and large-scale enterprises. Actually, China's domestic beer makers such as China Resources Breweries, Tsingtao Brewery and Yanjing Brewery also performed actively last year in the M&A activities. Over the past year, 10 mergers and acquisitions occurred in the nation's beer sector, with the value of these deals amounting to CNY 5.6 billion.

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