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InBev, A-B Merger to Have Big Effect on Chinese Market |
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Thursday, 29 May 2008 |
SHENZHEN, China: A world-shaking purchase between two beer giants is likely to have a big effect on China's beer industry.
The Belgium-based InBev, the No. 1 beer brewer in the world, is reportedly to take over the third largest beer brewer Anheuser-Busch for $46 billion. The latter owns the distinguished beer brand, Budweiser.
InBev was incorporated in 2004 by Interbrew and PAB. Now it is holding 14 percent of the global beer market, with more than 200 beer brands.
Latest financial report of InBev indicates that the group recorded total sales of EUR 13.308 billion in 2006, with its sales in China rising 7.7 percent. The group has 33 beer brewhouses in eight provinces of China, with total output of more than 4 million tons each year. It has become the third largest beer brewer in China after Qingdao and China Resources.
By taking over Anheuser-Busch, Inbev will control completely the 100-year-old Harbin Beer and 27 percent stakes in Qingdao Beer.
Anheuser-Busch purchased Harbin Beer in June 2004 after buying 29.4 percent stakes in the Chinese company from SabMiller, the world second largest beer company, taking the whole industry by surprise.
In April 2005, Anheuser-Busch bought 27 president stakes in Qingdao Beer through a private share placement, having become the second largest shareholder of Qingdao Beer after the State Owned Asset Management Committee of Qingdao.
Last year, Qingdao Beer and Harbin Beer were ranking the second and fifth place in China in terms of their output, 505 KL and 149KL, respectively. Their total output is nearing that of China Resources.
As for the prospect about the cooperation of Anheuser-Busch and InBev, industry analysts believe that Anheuser Busch is showing no interests in the offer of Anheuser-Busch because it is now nominating more than half of the beer market in the U.S.
Plus the rising raw material prices, the ailing credit market and its independent management, it is not easy for InBev to bring the deal to pass.
What is more, some overseas media report that Inbev is raising money for the deal. Some financial institutions such as JP Morgan have arranged a $50 billion financing scheme.
With completion of the purchase, InBev will raise additional $10 billion to $17 billion within 12 months after the deal.
Experts say that the merger of the two giants will present a titan with total assets of $100 billion, controlling one fourth of the world beer market.
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