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Hong Kong: Shares in China's Harbin Brewery, which have soared this week amid a possible takeover battle between the world's two top beer makers for the firm, were suspended on May 7 over statements made by its chief executive, according to Reuters. Meanwhile, Anheuser-Busch said it did not expect its plan to buy 29 % of China's fourth largest brewer, which it revealed over the weekend, to meet regulatory resistance. "The company is perfectly confident that it will receive the relevant regulatory approval," a spokesman told Reuters.

Harbin shares finished the Hong Kong morning session 7.18 % lower at HK$4.525 as investors took profits. The stock leapt by as much as 53 % this week after SABMiller followed news of its rival's investment in Harbin with a hostile US$553 million takeover offer.

Investors appear to be betting that Anheuser-Busch will make a counter-bid to SABMiller's HK$4.30 a share offer. SABMiller already owns a 29.4 % stake in Harbin, but the Chinese firm severed the strategic partnership between the two companies and has advised shareholders not to act on SABMiller's bid. After their decline on Friday, Harbin shares still traded 40 % above where they were before Anheuser-Busch and SABMiller revealed their intentions.

Harbin shares were suspended on Friday at the company's request, and a company spokeswoman said that a further statement could be made on Saturday. A brief statement released by the Hong Kong exchange said Harbin shares were suspended pending a further announcement over media statements made by the company's chief executive.

Harbin CEO Peter Lo held several media interviews on Thursday. He told Reuters that Harbin's 10-month-old relationship with SABMiller had failed, and said the Chinese firm regards Anheuser-Busch as a preferable long-term partner. A SABMiller spokesman declined comment on Friday.

Anheuser-Busch is expected by many in the market to make a counter-offer for all of Harbin, although the St. Louis-based maker of Budweiser beer has not revealed its plans.

China is the world's biggest beer market by volume and is growing by as much as 8% a year as China's booming economy lifts domestic spending power. China limits foreign investment levels in some sectors, such as retail, but there is no such limit in the food and beverage industry. China wants to privatise its lumbering state sector to make its industries more efficient and shed money-losing enterprises from state books.

Harbin, which is fast-growing and regarded as relatively efficient, was controlled by the Harbin municipal government before the northeastern city agreed in March to sell its entire 29 % stake to a group of undisclosed investors. Anheuser-Busch is buying that stake. Expectations of a looming a takeover battle -- the first between two foreign players for a major Chinese company -- have pushed the valuation of Harbin up to 28 times 2004 forward earnings as of midday on Friday.

"This is not about fundamentals, but speculation," said Martin Lau, fund manager with First State Investments. "We don't know whether A-B would make a counter offer or not, and there are a number of issues that need to be resolved, including whether A-B would receive the approval," he said. (US$=HK$7.8)


07 May, 2004