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Anheuser-Busch Co, the world's largest brewer, has raised its stake in Hong Kong-listed Harbin Brewery to 36 percent from about 29 percent, the market regulator said Tuesday.
The move stirs a second round battle between Anheuser-Busch and its arch-rival SABMiller, the world's second-biggest brewer, for control of Harbin Brewery.
Anheuser-Busch bought 69.6 million shares in Harbin Brewery from Capital Group Co, the third-largest US mutual fund, at HK$5.58 (US$0.67) each on Monday, the Hong Kong Securities and Futures Commission announced. The purchase makes Anheuser-Busch's stake in Harbin exceed the 29.4 percent stake held by London-based SABMiller.
And the market expects that the US brewery giant is going to make a general takeover offer of about US$720 million for Harbin in the coming few days.
Under Hong Kong takeover rules, an investor must make an offer for all of a company's shares if its holdings reach 30 percent, and the bid must be at prices at least as high as the highest price the firm paid for shares in the target over the previous six months.
No immediate response was made by Harbin, Anheuser-Busch and SABMiller.
"Anheuser-Busch has offered a perfect price and I believe Harbin is likely to accept it," said Alex Tang, research director at Core Pacific Yamaichi Securities in Hong Kong.
The price - HK$5.58 (US$0.67) per share - is 48 times the company's price earning, and much higher than HK$4.30 (52 US cents) per share, or US$550 million, offered by SABMiller on May 24.
Harbin's management prefers a partnership with Anheuser-Busch, and has asked its shareholders to reject SABMiller's offer, saying the 10-month co-operative relationship with SABMiller has failed.
"The purchase shows that foreign investors have seen a bright future in the domestic beer market," Tang said.
According to Tang, Anheuser-Busch could not accept losing the takeover battle, as SABMiller owns 49 percent of China Resources Breweries, China's second-largest brewery, which competes with Harbin in Northeast China.
Together, CRB and Harbin control 60-65 percent of the regional market. If SABMiller owned Harbin, it would gain pricing power in a sector notorious for competition and thin margins.
"The surprisingly high bid and its stake raise makes it tougher for SABMiller to make a counter bid," Tang said.
SABMiller is likely to give up, but still it would not walk away empty-handed, he said. If it sells its stake to Anheuser-Busch at HK$5.58 a share, it would pocket a profit of US$124 million on its investment in Harbin.
Harbin shares were suspended from trading ahead of the market opening on Tuesday, after closing at HK$5.10 (62 US cents) on Monday.
The shares have rocketed 58 percent since early May, when Anheuser-Busch announced it bought a 29 percent stake in Harbin Brewery for HK$1.08 billion (US$130 million), igniting a battle with SABmiller, which bought a 29.4 percent share in Harbin last year.
Because of the Harbin developments, other beer stocks in the Hong Kong market such as Tsingtao Brewery surged, though the market ended down.
(China Daily June 2, 2004)
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