AB sells SABMiller’s stake to Chinese partner

AB sells SABMiller’s stake to Chinese partner

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Anheuser-Busch InBev, the largest brewer in the World will sell SABMiller’s stake in China’s leading beer maker to the local partner for $1.6bn. The decision to sell its stake came after the merger decision with China Resources Beer (Holdings) Co. The Chinese company will purchase 49% stake in Snow Breweries, its joint venture with SABMiller. The Belgian-Brazilian brewing company AB InBev announced last year that it would take over SABMiller for $121bn, which will become the third biggest ever acquisition in the history. This will allow AB InBev to produce three times more beer than its next opponent.

AB InBev with a 15.9 percent presence in Chinese domestic market has around 39 breweries in the country according to a data from 2014. But according to Analysts, the decision to take over Snow Breweries holding would not do much good for the China Resources Beer. The Chinese conglomerate will lose a strong partner which will affect its premium segment beer.  The Snow Breweries was launched in 1994 and had a market share of 24 percent in the country. According to SABMiller it was as a part of setting up the world’s biggest beer brand and had about 98 plants crosswise China.

An analyst at consultancy Business Connect China, Stacey Yu said: “Losing the Snow Breweries stake has a huge impact on the foreign brand because it will lose the price negotiation advantage it used to have with raw material suppliers and the scale-of-production advantage from the factories.” Another analyst with Guotai Junan Securities Song Tao, “After the acquisition deal between AB InBev and SABMiller, their market share in China would have exceeded 40%. This may not pass the antitrust survey by the ministry of commerce, so AB InBev had to sell the stake.”

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