Chongqing Brewery Says European Beer Makers Made Bids

Source: Bloomberg By Wing-Gar Cheng

April 30 (Bloomberg) -- Carlsberg A/S, Anheuser-Busch InBev NV and a Chinese venture of SABMiller Plc submitted bids to buy a 12.25 percent stake in Chongqing Brewery Co., the beer maker controlled by the government of China’s largest municipality.

Local-government-owned Chongqing Beer Group, which holds 32.25 percent of the Shanghai-listed brewer, wants to sell 59.29 million shares in the unit as part of a national government plan to shed listed assets, according to an exchange filing today. The sale is worth 1.87 billion yuan ($274 million), based on current prices. Carlsberg, based in Copenhagen, already owns 17.46 percent of the brewery.

Buying a stake in Chongqing Brewery would allow bidders to gain a share in the south-central Chinese beer market. Chongqing is the nation’s biggest municipality with 28.6 million residents, according to local government data.

“Getting the stake would help the international beermakers gain market share in the western parts of China,” Huang Shichuan, an analyst at Southwest Securities Co. in Chongqing said in a phone interview today. He recommends buying the stock. “Beer consumption is rising and it’s a good chance for the international beer makers to introduce new products to consumers,” he said.

Chongqing Brewery fell 2.7 percent to close 31.57 yuan in Shanghai today. The stock has risen 34 percent this year, compared with a 12.4 percent decline on the Shanghai Composite Index.

‘Continuing Consolidation’

“As the leading brewer in China, SABMiller’s associate CR Snow Breweries is an active participant in the continuing consolidation of the market,” Nigel Fairbrass, spokesman for the London-based drinks maker, said by email. Fairbrass declined to comment on the details of SABMiller’s interest in Chongqing.

China Resources Snow Breweries is SABMiller’s Chinese venture with China Resources Enterprise Ltd.

The brewer on April 26 posted net income that rose 5.3 percent to 34.4 million yuan ($5 million) in the first quarter as sales gained 2.4 percent to 453.7 million yuan.

Chongqing Brewery sold 1 million kiloliters (264 million gallons) of beer last year, or 2.4 percent of the total 42.4 million kiloliters sold in China, according to its 2009 earnings statement.

China Beer Consumption

The brewer aims to sell 1.12 million kiloliters of beer this year, according to its annual earnings statement. Per- capita consumption of the alcoholic drink in China was 30 liters in 2009, exceeding the global average of 27 liters, according to Seema International Ltd.

“The company will seriously consider the bids and the preferred choice will be selected based on how well it can build Chongqing Brewery into a bigger and stronger company,” today’s statement on the stake sale said.

Carlsberg would be the biggest shareholder in the listed company should it win the bid, according to data compiled by Bloomberg.

Carlsberg’s spokesman Jens Bekke confirmed the bid. “We don’t know exactly how long the process will take from here,” Bekke said.

Leuven, Belgium-based Anheuser-Bush InBev’s spokeswoman Natacha Schepkens declined to comment.

Chongqing’s population figures include city and rural residents living under the local administration. Counting only urban dwellers, Shanghai is China’s largest city.

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