SABMiller vs. Anheuser-Busch:
The Takeover Battle for Harbin Brewery
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Case Details:
Case Code : BSTR122
Case Length : 23 Pages
Period : 2002-04
Organization : SABMiller Plc., Anheuser-Busch Inc
Pub Date : 2004
Teaching Note : Available
Countries : China
Industry : Beer
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EXCERPTS
Sabmiller And Harbin - Conflict Of Interests
In 2002, when China emerged as the world's largest beer market (by volume), SABMiller moved quickly to strengthen its operations in that country. In June 2003, SABMiller acquired a 29.6% equity stake (later diluted to 29.4%) in Harbin for HK$ 675 mn (approximately US$ 87 mn), from China Enterprise Development Fund (CEDF), replacing the latter as Harbin's largest shareholder.
Commenting on this, Mackay said, "We are delighted to have made this strategic investment in Harbin, one of the most successful and profitable brewers in the Chinese market. The transaction represents a further step in SABMiller's strategy in China of focusing on local brands to build regional leadership, and strengthens our position in the world's largest beer market."
Peter Lo (Lo), CEO, Harbin, said, "We are very pleased to be partnering with one of the world's leading brewing groups, which has the ability to bring significant value to Harbin. Its brands, expertise and experience in developing countries are all extremely valuable to us..."
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The Takeover Bid
AB's announcement of investment in Harbin came as a sudden blow to SABMiller.
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SABMiller realized the need to act fast, because with AB acquiring roughly equal stakes in Harbin, it would be difficult for it to leverage Harbin's leadership in the North and North Eastern regions to its advantage. Nigel Fairbrass (Fairbrass), the spokesman for SABMiller, said, "This town (Harbin) is too small for both of us." On May 05, 2004, SABMiller launched a takeover bid of US$ 550 mn
for Harbin stock with independent shareholders (accounting for about
41.5% stake in Harbin), at HK$ 4.30 per share, a 33% premium over
Harbin's closing price of HK$ 3.22 on April 30, 2004 (See Table III).
The offer was conditional on the acceptance leading to the company
holding more than 50% of the issued share capital of Harbin. |
Commenting, Mackay said, "Our offer represents outstanding and certain value for current Harbin Brewery shareholders and delivers unique benefits to Harbin Brewery through co-operation with our existing operations in China (CRB)...
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