SABMiller associate announces acquisitions in Zhejiang and Anhui provinces in China
24 July 2006
China Resources Snow Breweries Limited (“CR Snow”), an associate of SABMiller plc and a subsidiary of China Resources Enterprise, Limited (“CRE”), announces that it has agreed to acquire a 100% equity interest in Zhejiang Yinyan Brewery Company Limited or “Yinyan Brewery” for a cash consideration of US$42.3 million. In addition, CR Snow will acquire the brewing related assets of the Anhui Huaibei Xiangwang Brewery Company Limited or “Xiangwang Brewery” for a consideration of US$10.1 million.
Situated in the Haiyan county of Zhejiang Province on the east coast of China, the Yinyan Brewery is well positioned to further extend CR Snow’s footprint in northern Zhejiang, an area which is close to a number of major cities including Shanghai, Hangzhou, Suzhou and Ningbo. Similarly, Xiangwang Brewery is based in Huaibei, a major city in northern Anhui. Upon acquisition, our national brand “SNOW” will be produced as soon as practicable. At present, CR Snow has two breweries in Zhejiang Province and five breweries in Anhui Province, with 2005 sales volumes of 2.9 million hectolitres and 4.9 million hectolitres respectively. Both breweries are strategic acquisitions in the development of CR Snow’s footprint in China.
Incorporating Yinyan Brewery’s net debt of US$6 million and CR Snow’s intention to invest an additional US$1.8 million, the total investment cost in Yinyan Brewery is expected to be approximately US$50.2 million. The current annual production capacity of the brewery is 1.8 million hectolitres and this will be increased to 2.4 million hectolitres after undergoing the planned investment. At present, the portfolio is focused on the “Yinyan” series of beers, which are distributed in the Jiaxing area of Zhejiang; and in Shanghai. In 2005 the Yinyan Brewery sold approximately 1 million hectolitres of beer.
The consideration for the acquisition of Xiangwang Brewery is based on appraised asset value, with an intended further investment of US$7.4 million, bringing total investment cost to approximately US$17.4 million. The annual production capacity of the brewery will be upgraded from 930,000 hectolitres to 1.6 million hectolitres. At present, the brewery’s main brand “Xiangwang”, has a dominant market share in Huaibei and in 2005 the brewery reported sales volume of about 650,000 hectolitres.
Mr. André Parker, Managing Director of SABMiller Africa & Asia, said, “We have a profitable and growing presence in Zheijiang and Anhui. Therefore these acquisitions will not only effectively reinforce CR Snow’s market position in these provinces, but provide a larger platform to expand our national brand SNOW in these strong growth areas.”
Mr. Mark Chen, Managing Director of China Resources Enterprise, Limited said, “The two acquisitions play a crucial role in the strategic development of CR Snow in these areas. Yinyan Brewery will generate synergies with our existing breweries at Qianjiang and Xiling, cementing a strong network in the northern region of Zhejiang Province. It will also provide us direct access to the Shanghai market given its proximity to the city. Whilst at the same time, acquisition of Xiangwang Brewery will establish CR Snow’s production base in northern Anhui and add to our dominant market position in the province.”
Notes to editors
About China Resources Snow Breweries Limited
China Resources Snow Breweries Limited was established in 1994 and is engaged in the production, sales and marketing of beer and beverages in China. Its shareholders are China Resources Enterprise, Limited and SABMiller plc. China Resources Enterprise, Limited has a 51% interest in China Resources Snow Breweries Limited while SABMiller plc holds a 49% interest. It operates about 40 breweries in the Chinese Mainland with a total sales volume of about 39.5 million hectolitres in 2005.
About SABMiller plc
SABMiller plc is one of the world’s largest brewers with brewing interests or distribution agreements in over 60 countries across five 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 2006, the group reported US$2,626 million adjusted pre-tax profit and a turnover of US$15,307 million. SABMiller plc is listed on the London and Johannesburg stock exchanges.
This announcement is available on www.sabmiller.com
About China Resources Enterprise, Limited
China Resources Enterprise, Limited is listed on the Hong Kong Stock Exchange and is also traded on SEAQ International of the London Stock Exchange. It is also one of the constituent stocks of the Hang Seng Index in Hong Kong and Hang Seng London Reference Index. The Group focuses on the consumer businesses in both Hong Kong and the Chinese Mainland, with core activities being retail, beverage, food processing and distribution, textile and property investment.
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