SAB makes two further acquisitions in China
3 December 2001
South African Breweries plc (SAB), the world's leading brewer in developing markets, today announced two further acquisitions in China to consolidate it's position as the country's second largest brewer.
SAB, through its Chinese joint venture, China Resource Beverages Ltd (CRB), has acquired a 60% interest in the Euro Dongxihu Brewery in the city of Wuhan, Hubei Province, central China, from Danone Asia Pte Ltd. The total book value of the net assets to be acquired is US$76 million. The transaction is subject to various approvals, including regulatory approvals.
Euro Dongxihu Brewery has an installed capacity of around 4 million hectolitres, of which 3 million is currently utilised. The company, through its mainstream and premium brands, has around 80% of the Wuhan market and a strong position in Hubei province. Wuhan, which is situated on the banks of the Yangtze River, is a city that has been identified by the Chinese Government for future growth, following development of the Three Gorges Project and the government's "Go West" economic development programme. The city, which is the capital of Hubei Province, has a population of 5 million of the 60 million who live in the province.
SAB has also acquired, through CRB, the Snow Leopard Brewery, which is located near Changchun city, the capital of Jilin Province, North East China. CRB has established a new company, China Resources (Chang Chun) Brewery Co Ltd to acquire the brewing assets and brands of the Snow Leopard Brewery in which it will hold 85%, with local shareholders owning the balance.
Snow Leopard Brewery's key brands will be developed alongside CRB's existing portfolio in Jilin Brewery, creating a major brewer in the province. Snow Leopard Brewery has a capacity of 1.2 million hectolitres, of which 0.8 million hectolitres is currently being utilised. Jilin Brewery is currently operating at its full capacity of 2.1 million hectolitres. CRB will be able to use the additional capacity for its existing markets, particularly in Changchun city, whilst gaining access to new markets in the north of Jilin province.
The net cost of investment to CRB, including refurbishment, will be US$5.6 million. This will be funded through a combination of CRB's internal resources and local Renminbi debt at favourable rates.
Graham Mackay, chief executive of SAB said: "Today's announcement is tangible proof of the successful SAB expansion strategy in China, where we have been acquiring and growing local brands to achieve regional leadership. I believe that the Euro Dongxihu Brewery provides excellent opportunities for development and growth in Hubei Province, whilst the Snow Leopard Brewery will complement our presence in Jilin Province and adds to our position in North East China."
Notes to editors
1. South African Breweries plc is the world's leading brewer in developing markets, with major brewing and distribution operations in Africa, Central and Eastern Europe and Asia. It is the world's fifth largest brewer overall by volume with 100 breweries in 24 countries and over 31,000 employees. In the year ending 31 March 2001, SAB generated US$646 million pre-tax profit from turnover of US$4.184 billion. The company is listed on both the London and the Johannesburg stock exchanges.
2. The Euro Dongxihu and Snow Leopard Breweries are SAB's 26th and 27th brewery acquisitions in China since 1994. SAB operates in China through China Resource Beverages Ltd (CRB), in which it has a 49% holding. Through CRB, SAB is China's leading foreign brewer. Key brands produced by SAB's Chinese breweries include: Snowflake, Keller and Lowen. CRB's breweries in China have a combined capacity of more than 35 million hectolitres.
3. The Chinese market is amongst the largest and fastest growing markets in the world, with a total beer market estimated to be 220 million hectolitres per year in 2001, and an estimated growth rate of 7.2% per annum, second only to the United States in terms of volume consumed.
Forward Looking Statements
This announcement includes 'forward-looking statements'. All statements other than statements of historical facts included in this announcement, including, without limitation, those regarding the Company's financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to the company's products and services), as well as those regarding the outlook for the Chinese market and economy, are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the Company or the Chinese market and economy to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future. These forward-looking statements speak only as at the date of this announcement. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
For Further information:
Nick Chaloner, Director of Communications, SAB plc
+ 44 (0) 20 7659 0119
Mob: + 44 (0) 7880 502 755
Ciaran Baker, Head of Corporate Communications, SAB plc
+44 (0) 20 7659 0120
Mob: +44 (0) 7979 95 4493
Anna Miller Salzman, Head of Investor Relations, SAB plc
+ 44 (0) 20 7659 0106
Mob: + 44 (0) 7973 837 070