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China: SABMiller, the world's second largest brewer, made the second round of bidding for Australian brewer Lion Nathan's Chinese business, The Times reported on Tuesday, September 14.
The estimated 85-million-pound ($153 million) bid, reported by The Times without citing specific sources, compares with a range of analysts' expectations of A$100 million ($70 million) to A$150 million for the loss-making China operations.
SABMiller, listed in both London and Johannesburg, withdrew from a bidding war for China's Harbin Brewery earlier this year, ceding the field to arch-rival Anheuser Busch. But it did not renounce its ambition to expand in China, the world's largest beer market, which is growing at about 6 percent a year.
Global rivals such as Anheuser Busch, Dutch Heineken and Belgium's InBev have also been tipped as possible bidders in Lion Nathan's China auction, as have Asian groups such as China's Chongqing and Japan's Asahi, according to Reuters.
Melbourne analysts said Lion Nathan would benefit from a wave of mergers among Chinese brewers as it moved closer to the sale. " "Clearly Lion Nathan is trying to strike while the iron is hot," an analyst said.
Lion Nathan entered China in 1995 but its operations there have since tallied up losses of more than A$200 million, including writedowns. China is the world's largest beer market by volume but Lion Nathan has found it tough to turn a profit in the highly competitive market.
Its China revenues in the six months to March 31 climbed 15.9 per cent to A$22.8 million and volumes, excluding the acquisition of the Hua Xia Brewing Co in Changzhou, were up 54 per cent to 49.6 million litres. But Lion Nathan warned increased competition and cost pressures would make it challenging to break even in operating earnings terms for the full year. The company's key brands in China are Taihushui, Steinlager, and Rheineck, targeting the Yangtze River Delta region, which includes Shanghai. Its main breweries are in Suzhou and Wuxi and it also has a smaller plant at Changzhou. Its plants had been operating at well below capacity, analysts said.
15 September, 2004
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