China Resources Beer to fund SABMiller JV stake through $1.2-bn share sale

07 Jul 2016


China Resources Beer Holdings Co plans to raise HK$9.5 billion ($1.2 billion) in a Hong Kong share sale in order to fund the purchase of SABMiller Plc's 49 per cent stake in its Chinese venture.

China Resources Beer will issue about 811 million rights shares at HK$11.73 apiece, 25 per cent less than the ex-rights price, taking dilution into account, it said in a statement.

''Given the great growth potential and continuous consolidation opportunities in China's beer market, China Resources Beer feels confident about the industry's long term development,'' said chairman Chen Lang in a statement. ''We think this share rights issue can help the company to expand in the industry.''

In March, China Resources Beer had agreed to buy SABMiller's 49-per cent stake in its joint venture China Resources Snow Breweries (CR Snow) for $1.6 billion, in order to take full control of the country's top beer brand (See: China Resources Beer to buy SABMiller's 49% stake in China Resources Snow for $1.6 bn).

China Resources Beer had then said that it plans to fund the all cash deal through a combination of funding options including debt and/or equity financing.

AB Inbev, the world's largest brewer, had struck a deal in November 2015 to buy its British rival SABMiller for $121 billion.

To gain Chinese regulatory approval, SABMiller agreed to sell its majority stake in CR Snow, which produces the world's top-selling cold one, Snow Beer, in order to get the merger deal approved in China.

CR Snow is a 22 year-old joint venture between Hong Kong-listed China Resources Beer (Holdings) and SABMiller.

Beijing-based CR Snow is the largest brewing company in China, with a market share of around 21 per cent.

Its brands include Snow, which is currently the world's biggest-selling beer measured by volume, with sales of around 16.5 billion pints, Blue Sword, Green Leaves, Huadan, Huadan Yate, Largo, Löwen, New Three Star, Shengquan, Shenyang, Singo, Sip, Tianjin, Yatai, Yingshi and Zero Clock.

CR Snow competes with major brewers including Tsingtao Brewery Co., Beijing Yanjing Brewery Co., Anheuser-Busch InBev NV, and other smaller, regional producers, accounting for almost 30 per cent of the market.

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