SABMiller Expands in China
Two breweries are in Liaoning province, one brewery is in Anhui and one is in Hunan province. The total investment cost for the four acquisitions is US$79m, which includes a cash consideration of US$57.0m.
28/08/07 China Resources Snow Breweries Limited, SABMiller's joint venture in China with China Resources Enterprise, Limited, has announced that it has agreed to acquire four breweries in separate transactions. Two breweries are in Liaoning province, one brewery is in Anhui and one is in Hunan province. The total investment cost for the four acquisitions is US$79m, which includes a cash consideration of US$57.0m.
CR Snow has agreed to acquire an 80% equity interest in Liaoning Yalujiang Brewery Company Limited and the brewing assets of Huludao Juhua Brewery Company Limited 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 Limited and a 100% equity interest in Hunan Xinghua Brewery Company Limited. All four breweries will benefit from enhanced investment in their facilities to bring them up to CR Snow's production standards.
Liaoning province is located in the north-east of China with a population of about 42 million inhabitants. At present, CR Snow has eight breweries in Liaoning province and is the leading brewer there. It has total production capacity of over 11 million hectolitres but the existing plants are close to full capacity. The addition of Yalujiang Brewery at Dandong in south-eastern Liaoning and Juhua Brewery in western Liaoning will provide immediate additional production capacity of 2.7 million hectolitres. The breweries will also enhance distribution efficiency, extending CR Snow's reach over this extensive province.
Located in the north-eastern county, Wuhe in Anhui province, Wanpi Brewery will boost CR Snow's production capacity there to approximately 14 million hectoliters. It will also generate synergies with CR Snow's existing breweries at Bengbu and Chuzhou, cementing a strong network in the northern region of Anhui. 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 province and alongside the famous Dongting Lake. At present, CR Snow does not have any plant in Hunan province though a small quantity of SNOW was sold locally. The current annual production capacity of the brewery is 1.2 million hectolitres and it has the dominant market share in Yueyang.
Mr. André Parker, Managing Director of SABMiller Africa & Asia, said, "The acquisitions reflect our commitment to accelerate the national presence of "SNOW". Upon conclusion, they will add a total of about 5.0 million hectolitres to CR Snow's current production capacity of close to 90 million hectolitres. The average attributable investment cost of around US$18 per hectolitre, is very reasonable; reflecting our ability to expand profitably at low cost."
Mr. Mark Chen, Managing Director of China Resources Enterprise, Limited said, "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."
