E-Malt.com News article: Hong Kong: China Resources Snow Breweries announces four acquisitions in Liaoning, Anhui and Hunan

China Resources Snow Breweries Limited (or “CR Snow”), a subsidiary of China Resources Enterprise, Limited (or “The Company”) and a joint venture with SABMiller plc, announced on August 24th that it has agreed to acquire two breweries in Liaoning Province and one brewery in each of Anhui and Hunan Provinces in four separate transactions. The total investment cost for the four acquisitions is RMB596 million, which includes a cash consideration of RMB431 million.

CR Snow has agreed to acquire an 80% equity interest in (“Liaoning Yalujiang Brewery Company Limited” or “Yalujiang Brewery”) and the brewing assets in (“Huludao Juhua Brewery Company Limited” or “Juhua Brewery”) through the formation of a joint venture in which it will own an 85% equity interest. It has further agreed to acquire the brewing assets in (“Anhui Wanpi Brewery Company Limited” or “Wanpi Brewery”) and a 100% equity interest in (“Hunan Xinghua Brewery Company Limited” or “Xinghua Brewery”). All the four breweries will undergo technology upgrade to their existing facilities in order to align with the production requirements for “SNOW”.

In 2006, Yalujiang Brewery sold approximately 100,000 kiloliters of beer with a production capacity of 143,000 kiloliters, while Juhua Brewery sold around 58,000 kiloliters with a production capacity of 127,000 kiloliters. At present, CR Snow has eight breweries in Liaoning Province with a total production capacity of over 1.1 million kiloliters and is the leading brewer in the province. Yalujiang Brewery at Dandong in south-eastern Liaoning and Juhua Brewery at Huludao in western Liaoning will enhance distribution efficiency and coverage to overcome the distance from CR Snow’s existing plants. They will also fill the current production gap as the existing plants are close to full utilization.

Located at the northeastern county, Wuhe, Wanpi Brewery has a total annual production of 103,000 kiloliters and a sales volume of about 58,000 kiloliters last year. The acquisition will boost CR Snow’s production capacity in Anhui Province to approximately 1.4 million kiloliters. It will also generate synergies with CR Snow’s existing breweries at Bengbu and Chuzhou, cementing a strong network in the northern region of Anhui. Currently, CR Snow is the largest brewer in the province with seven breweries.

Xinghua Brewery is situated at Yueyang in the north-eastern region of Hunan Province and alongside the famous Dongting Lake. At present, CR Snow does not have any plant in Hunan Province though a small quantity of SNOW was sold locally. The current annual production capacity of the brewery is 119,000 kiloliters. Last year, 58,000 kiloliters of beer was sold with a dominant market share in Yueyang.

Mr. Mark Chen, Managing Director of China Resources Enterprise, Limited said, “The acquisitions in Liaoning and Anhui will generate synergies with our existing breweries, refine the distribution network and strengthen our leading position in the provinces. In Hunan, the acquisition will provide a solid platform for our national brand “SNOW” to expand and concurrently complement our existing operation in Wuhan given its close proximity.”

Mr. André Parker, Managing Director of SABMiller Africa & Asia, said, “The acquisitions reflect our commitment to accelerate the national presence of “SNOW”. Upon conclusion, they will add a total of about 5.0 million hectoliters to CR Snow’s current production capacity of close to 90 million hectoliters. The average attributable investment cost of around US$18 per hectoliter, is very reasonable; reflecting our ability to expand profitably at low cost.”

About China Resources Snow Breweries Limited
China Resources Snow Breweries Limited was established by the Company in 1993 and became a joint venture with SABMIller plc in 1994. It is engaged in the production, sales and marketing of beer and beverages in China. Its shareholders are China Resources Enterprise, Limited and SABMiller Asia Limited, a subsidiary of SABMiller plc. China Resources Enterprise, Limited has a 51% interest in China Resources Snow Breweries Limited while SABMiller Asia Limited holds the remaining 49% interest. It operates more than 50 breweries in the Chinese Mainland with a total beer sales volume of about 5.3 million kiloliters in 2006.

About China Resources Enterprise, Limited China Resources Enterprise, Limited is listed on the Hong Kong Stock Exchange and is also traded on the London Stock Exchange. It is one of the constituent stocks of the Hang Seng Index in Hong Kong. The Group focuses on the consumer businesses in both the Chinese Mainland and Hong Kong, with core activities being retail, beverage, food processing and distribution, textile and property investment.

About SABMiller plc
SABMiller plc is one of the world’s largest brewers with brewing interests or distribution agreements in over 60 countries across six continents. The group’s brands include premium international beers such as Miller Genuine Draft, Peroni Nastro Azzurro and Pilsner Urquell, as well as an exceptional range of market leading local brands. Outside the USA, SABMiller plc is also one of the largest bottlers of Coca-Cola products in the world. In the year ended 31 March 2007, the group reported US$3,154 million adjusted pre-tax profit and revenue of US$18,620 million. SABMiller plc is listed on the London and Johannesburg stock exchanges.


24 August, 2007