SABMiller Joint Venture Announces First Acquisition in Shandong Province

Hupo Brewery has an annual production capacity of 2.7 million hectolitres and upon completion of the acquisition, approximately $8 million will be spent on technology upgrades to the existing facilities in order to increase its capacity to 3 million hectolitres and ensure the production requirements are sufficient to produce the brand SNOW.

13/02/09 China Resources Snow Breweries Limited, SABMiller's joint venture in China with China Resources Enterprise, Limited (CRE), announces that it has agreed to acquire the brewing assets of Shandong Hupo Brewery through the formation of a joint venture in which it will initially own a 90% equity interest. CR Snow will acquire the remaining 10% within three years after the joint venture is formed. The total cash consideration for the acquisitions amounts to approximately $42 million.

Hupo Brewery is situated in Zouping county, northern Shandong Province. More beer is consumed in Shandong Province than any other province in China and Zouping county serves as a transportation hub to neighbouring major cities such as Binzhou, Jinan, Zibo and Dongying.

Hupo Brewery has an annual production capacity of 2.7 million hectolitres and upon completion of the acquisition, approximately $8 million will be spent on technology upgrades to the existing facilities in order to increase its capacity to 3 million hectolitres and ensure the production requirements are sufficient to produce the brand SNOW.

On 26th February 2009, CR Snow announced that it had agreed to acquire three breweries in each of Anhui, Liaoning and Zhejiang Provinces in three separate transactions.

Mr. Ari Mervis, Managing Director of SABMiller Asia, said; "SNOW continues to enjoy good growth in China and the significant import sales volume that the brand already enjoys in the province certainly justifies the establishment of a production base here. The brewery has a strategic location in northern Shandong and is well connected by highways to the other major cities in this region."

Mr. Long Chen, Managing Director of China Resources Enterprise, Limited said, "The acquisition of Hupo Brewery will raise our market presence in Shandong Province which is currently the largest beer sales province of China. It is a major step for us to complete the distribution network in the coastal regions of eastern China."