Yanjing Brewery has made its largest acquisition to date in its quest to head China's beer market - buying a producer in the home province of its prime rival Tsingtao Beer.
A Yanjing official said it paid 120 million yuan (about HK$112.46 million) for 52 per cent in Shandong Qufu San Kong Beer. It has an annual output capacity of 400,000 tonnes of beer, giving it 25 per cent of the output in the eastern province of Shandong, Tsingtao's home territory.
The remaining 48 per cent will be held by San Kong, which is providing plant, equipment and a small amount of capital.
'Our strategy is to make alliances with strong breweries to maximise the use of our resources and increase our market share,' the Yanjing official said.
'San Kong has been profitable. The city government has been very supportive of our acquisition,' he said.
Yanjing has been negotiating the acquisition since 1997, when it wanted to buy out the share of San Kong held by a British investment fund. The talks initially floundered on price.