SABMiller, the world's No.2 brewer, announced on May 24 it has made a formal offer to buy all remaining Harbin Brewery Group Ltd shares it does not already own for $HK3.04 billion ($556.8million) and hired ABN Amro Holding as an adviser. SABMiller, which owns 29.4 % of Harbin Brewery, offered $HK4.30 a share for the remainder of China's oldest brewer, according to Bloomberg. The offer, made in a letter to shareholders, is open until June 21.

Harbin Brewery shares, little changed at $HK4.975 in Hong Kong, have traded at more than the offer price since the plan was announced on May 5, on optimism that Anheuser-Busch would make a counter bid. Anheuser-Busch, the world's largest beer maker, last week completed a purchase of a 29 % stake, setting up a possible battle over China's fourth-biggest brewer.

Lilian Leung, an analyst at ING Groep, who has a sell recommendation on the stock, said: "SABMiller's offer price is quite close to our previous fair value for the stock. The share price is at a quite high level already."

SABMiller said the offer price was 38 times Harbin Brewery's earnings last year and more than four times the brewer's net asset value.

Anheuser-Busch and SABMiller may jostle for control to strengthen their foothold in a market Harbin Brewery estimates will grow by 6 per cent a year this decade. China overtook the US two years ago as the world's top brewing nation.

ABN Amro and Anglo-Chinese Corporate Finance are advising SABMiller. Harbin Brewery, whose management opposes SABMiller's takeover, hired CLSA, the Asian investment banking unit of France's biggest bank, as adviser.

The Harbin government has expressed support for Anheuser-Busch.

SABMiller said it would meet officials from Harbin and the north-eastern province of Heilongjiang, where Harbin Brewery is located.

26 May, 2004