China Resources Snow Breweries, a joint venture between red chip China Resources Enterprise and London-listed SABMiller, will pay 2.5 billion yuan to buy local partner Blue Sword Group to strengthen its foothold in Sichuan province and penetrate Guizhou province.
The acquisition includes a 38 per cent equity interest in 14 Blue Sword brewery companies in Sichuan, of which CR Snow now owns 62 per cent.
CR Snow will also take a 100 per cent interest in a brewery in Guizhou.
Analysts said the purchase was attractive, which is at about 16 times the assets' earnings for last year, or US$42 per hectolitre.
Shares in China Resources Enterprise were trading at about 24 times earnings while those of Tsingtao Brewery were trading at 50 times.
Belgium's InBev, which produces Stella Artois and Beck's beer brands, spent about US$80 per hectolitre, or a total of 5.89 billion yuan, in January last year to acquire Sedrin Brewery in Fujian province, analysts said.
Blue Sword, the leading brewer in the country's southwestern region, operates 13 breweries with CR Snow in Sichuan that can produce a combined 1.56 million kilolitres of beer a year.