E-Malt.com News article: 2104

China: Heineken N.V. announced on January 28, 2004 that it has reached an agreement, through its associated company Heineken Asia Pacific Breweries China Pte Ltd (Heineken APB), to acquire a stake in Guangdong Brewery Holdings Limited (Guangdong Brewery). Heineken APB has entered into an agreement to acquire an approximately 21%-stake in Guangdong Brewery through a combination of 133.8 million new shares in Guangdong Brewery and 165.5 million existing shares from GDH Limited at the price of HK$1.85 per share. The total acquisition is valued at EUR 57 million of which Heinekens share is EUR 28.5 million. The transaction will be funded from existing cash resources and will be earnings enhancing. GDH is the majority shareholder of Guangdong Brewery. Heineken APB is part of the 50-50 joint venture between Heineken and Fraser & Neave in the Asia-Pacific region. The deal is subject to approval by the independent shareholders of Guangdong Brewery.

Mr Thony Ruys, Chairman of Heineken NV said, The Guangdong province is one of the most important beer markets in China. The strong position of Guangdong Breweries in this region offers an excellent platform for further growth of the Heineken brand.

On 9 January 2004, it was announced that Heineken APB was to become the vehicle for the production and marketing of beer and other strategic activities such as investments, mergers and acquisitions in China. Heineken APB will combine the Chinese activities of Heineken and Asia Pacific Breweries.

The partnership with Guangdong Brewery, one of the most profitable listed brewers with operations in China, will strengthen the position of Heineken APB considerably. Its main brand is Kingway beer which is not only available in the Guangdong Province but also in Hong Kong, Macau and Taiwan. The company owns two breweries and has plans to build a third. Guangdong Brewery is listed on the Hong Kong Stock Exchange.

In Guangdong, sales of the Heineken brand may benefit substantially from Guangdong Brewerys distribution network. After minor investments Guangdong Brewery has the potential to brew Heineken.

China is the largest beer market in the world with an estimated sales volume of 250 million hectolitres of beer in 2003. With a population of 85 million people, Guangdong is one of the largest and wealthiest provincial beer markets in China with an estimated volume of 18 million hectolitres per year.


28 January, 2004