The Takeover of Harbin Brewery*

Abstract:

The case gives a detailed account of the battle between two of the world's leading breweries - Anheuser-Busch (AB) and SABMiller to takeover Harbin Brewery, the fourth largest brewery in China. The case explores the circumstances that led SABMiller to invest in Harbin and details the circumstances that forced that company to launch a hostile takeover bid for control of Harbin. It then examines the efforts made by Harbin to prevent the takeover attempt by SABMiller and also details the emergence of AB as a potential white knight, which eventually won the takeover bid for Harbin. Finally, the case explores who benefited most from the deal - AB, SABMiller, the Harbin Board or Harbin shareholders.

Issues: » Gain insights into the beer industry in China. » Examine the reasons that led the world's leading breweries - AB and SABMiller to increase their presence in the Chinese brewery market. » Study the defence strategies adopted by Harbin to thwart SABMiller's hostile takeover. » Analyse the synergies, in case SABMiller had acquired the majority stake in Harbin. » Aanalyse the role of Harbin's board in the takeover battle. » Study the benefits to AB and Harbin from the takeover deal.

Questions for Discussion:

1. Examine the circumstances that led SABMiller to launch a hostile takeover bid for control of Harbin. Critically comment on the role played by Harbin's board in the takeover battle. What other strategies the board could have adopted to avoid the hostile takeover launched by SABMiller?
2. How did the acquisition of Harbin by AB affect the different parties involved in the takeover battle, including AB, SABMiller, the Harbin board and its shareholders? Who do you think benefited the most from the deal? Give reasons to justify your answer.
3. Compare and contrast the potential synergy in the AB-Harbin takeover deal and the SABMiller-Harbin deal (assuming that it was approved). Do you think SABMiller lost a lucrative opportunity of significantly increasing its presence in China's brewery market by withdrawing its takeover bid? Given a choice, which deal would you have favoured and why?

Key words:
SABMiller Plc., Anheuser-Busch Inc., Harbin Brewery, Hostile Takeover, Takeover Defense Strategies, Chinese Takeover Regulations, White Knight, Trends in Chinese Beer Industry, Takeover Valuation, World's Largest Beer Markets

*Note : This case is a simplified version of a longer case study, and is intended for learners for whom English is a foreign language. The longer version of this case study (BSTR122) is available at: http://www.icmrindia.org/casestudies/catalogue/Business%20Strategy2/BSTR122.htm