E-Malt.com News article: 3607

China: InBev, the world's largest brewer by volume, announced today, November 8 that it is acquiring the remaining 45% interest in Hunan Debier Brewery Company Co. Ltd., located in Hunan province, China, for a cash consideration of USD 18.2 million. This transaction is part of InBev’s ongoing integration process of the Lion Group Breweries, which it acquired earlier this year. The transaction is expected to close by year end 2004.

InBev currently has two breweries in the Eastern Chinese province of Hunan (66.6 m inhabitants), the Hunan Debier Brewery in the city of Changsha and Zhuzhou Debier Brewery Co. Ltd in the city of Zhuzhou. Both breweries were acquired as part of the transaction with the Malaysian Lion Group, which sold its China brewery operations to InBev at the beginning of this year. As part of that transaction, InBev acquired 55% of the Hunan Debier Brewery. Today InBev announces the acquisition of the remaining 45% from Changsha Baisha Brewery Limited Liability Company.

InBev is one of the leading brewers in the Hunan province and it has a market share of over 80% in the city of Changsha. Hunan Debier brewery has a capacity of 1.3 m hl and 1.1 m hl of production volume, producing mainly the local Baisha brand. The brewery is profitable with an expected sales volume growth in 2004 of 32% versus 2003.

This transaction was completed at an EV/EBITDA multiple of 7.7x and at an EV/hl multiple of Euro29. Management expects this acquisition to be EPS accretive to InBev, from 2005 before goodwill amortization.

“With this acquisition, Interbrew China has reinforced its position in Hunan, further illustrating its commitment to the province,” says Patrice Thys, President InBev Asia Pacific Zone. “We are very pleased with the support we have received from the local government.”

“We are delighted to see Interbrew’s strong commitment in the Hunan market through this transaction,” says Mayor Tan of Changsha Government. “Interbrew shall receive full support from the Changsha Government for its investments in Changsha going forward.”

InBev is the third largest brewer in China, with a production capacity of 30 m hectoliters, a market share of over 10% and 18 breweries. It has operations in the Zhejiang, Guangdong, Hubei, Hunan, Jiangsu and Shandong provinces. The company has been active in China since 1984, providing the transfer of technical and brewing know-how to various Chinese brewing companies, including the Zhujiang Brewery in Guangzhou. In 1997, InBev entered the Chinese beer market as an operator with the acquisition of the Nanjing and Jingling Breweries. In 2002, it acquired a 24 per cent share in the Zhujiang Joint Stock Company, China’s fifth largest and most profitable brewer on a per-tonne basis, and a 70 per cent stake in K.K. Group’s brewing business, based in Zhejiang Province. In 2004, InBev acquired the China brewery activities of the Lion Group of Malaysia, providing Interbrew China with leading market positions in the six provinces where it is present. In July 2004, InBev also acquired 70 per cent share in Zhejiang Shiliang Brewery Company Ltd. in Zhejiang province. InBev's longstanding interaction with its Chinese partners has provided the company with strong local relationships and a good understanding of the Chinese beer market.

InBev is a publicly traded company (Euronext: INB) based in Leuven, Belgium. The company's origins date back to 1366, and today it is the leading global brewer by volume. InBev’s strategy is to strengthen its local platforms by building significant positions in the world's major beer markets through organic growth, world-class efficiency, targeted acquisitions, and by putting consumers first. InBev has a portfolio of more than 200 brands, including Stella Artois®, Brahma®, Beck’s®, Leffe®, Hoegaarden®, Staropramen® and Bass®. InBev employs some 70,000 people, running operations in over 30 countries across the Americas, Europe and Asia Pacific. In 2003, InBev realized a net turnover of approximately 9.3 billion euro (2003 pro forma).


08 November, 2004