Harbin Brewery clarifies its stance
It says the expertise of Anheuser-Busch would be beneficial
Harbin Brewery Group executives have further outlined their argument for rejecting a takeover bid by SABMiller in favour of further co-operation with Anheuser-Busch, as the unprecedented struggle for control of a major mainland company enters its second week.
Although earlier harshly critical of South African-based SABMiller, which bought 29.6 per cent of their firm in July last year, Harbin Brewery executives had not previously expanded on what they claim is the wisdom of working with Anheuser.
The world's largest brewer recently pipped SABMiller in the race to acquire another 29 per cent stake in Harbin Brewery, but has not yet made a general takeover offer of its own. Anheuser paid $3.70 a share.
For now, Harbin Brewery investors are being asked to weigh SABMiller's $4.30-a-share takeover offer against the benefits of an Anheuser partnership.
In a statement issued at the weekend to clarify remarks by chief executive Peter Lo, Harbin Brewery hailed 'Anheuser-Busch's recent success in China in building a nationwide network and promoting its Budweiser brand across the country and believed the company would benefit from Anheuser-Busch's expertise to establish a nationwide brand for Harbin'. Anheuser also has a 10 per cent stake in Tsingtao Brewery, China's leading national and only overseas-recognised beer brand.
As a regional brewer rooted in northeast China, nationwide expansion is one of Harbin Brewery's key challenges. It also claims to have been pressured by competition from another northeast brewer, SABMiller's 49 per cent-held China Resources Breweries.
SABMiller executives could not be contacted yesterday. But a source close to the company made it clear the world's No2 brewer would be appealing to shareholders' wallets. 'The offer is simple - it's about cash,' he said.
'[Harbin Brewery management] haven't said anything about shareholder value. They could be sitting on the beach if they accepted this,' he added, referring to a $110 million windfall six senior executives stand to receive in the event of a buyout.
ING Financial Markets analyst Lilian Leung said SABMiller's offer price is 24 times Harbin Brewery's projected final earnings for the year. This compares with the $641.2 million - 21 times 2002 earnings - it paid for its stake in the Harbin-based brewer last year.
Ms Leung recommended shareholders accept SABMiller's bid, saying that its offer of $4.30 per share should set a floor price for Harbin Brewery.
Another report by Credit Suisse First Boston analyst Marisa Ho also favoured SABMiller's bid.
