E-Malt.com News article: 2044

China: Belgian brewing giant, Interbrew, The World's Local Brewer©, announced on January 16 the closing of its transaction with the Malaysian Lion Group, originally announced in September 2003, to acquire a controlling interest in Lion Group's beer business in China. Along with Interbrew's other existing investments in China, this transaction positions the group as the third largest brewer in China with 21 million hectolitres sold per annum by 17 breweries present in 6 major provinces: Zhejiang, Guangdong, Hubei, Hunan, Jiangsu and Shandong.

More specifically, it will achieve: a number one position in the Zhejiang (47 m inhabitants), Guangdong* (78 m inhabitants) and Hubei (60 m inhabitants) provinces; a top 3 position in Hunan (64 m inhabitants) and Jiangsu (74 m inhabitants); and a small presence in the Shandong province (91 m inhabitants).

Patrice J. Thys, Interbrew Zone President Asia-Pacific, said: "In addition to strong volumes, well entrenched brands and local dominance, we have, through this transaction inherited a strong local management team which is a key resource we intend to fully leverage through ongoing training and development to deliver Interbrew's vision for the country."

Interbrew acquired 50% of Lion Group’s interests in 11 breweries in China for US$131.5 million. Sale and purchase agreement was signed on September 5, 2003. Transaction closed on January 16, 2004. Interbrew has a call option to acquire the remaining 50% for US$131.5 million, exercisable 12 months after closing. Key financial parameters are: Equity Value (for 100% of Lion Group interest): US$263m; Net Debt (attributable to Lion Group interest): US$ 11m; Enterprise Value (EV) (for 100% of Lion Group interest): US$274m / €221m; Total Production Volume: 11.6 m hl; Volume attributable to Lion Group interest: 6.4 m h; EV/hectoliter (production): €35.

“Transaction is in line with recent transactions in the sector in China. Acquisition multiple comparable to what we paid for KK Breweries in November 2002,” Interbrew said.

In a separate development, Interbrew announced on January 15 that it had taken over distribution of its premium beer brand Beck’s in China. Lion Nathan had produced and distributed the beer in the market since 2001.


16 January, 2004