Fosun buys out Asahi’s stake in Tsingtao Brewery as it turns its acquisitions back to its home turf

Fosun Group, one of China’s biggest buyers of overseas assets, has turned its sights back to its home turf, as it buys out a Japanese shareholder in one of the country’s oldest and biggest breweries.

Fosun has agreed to pay HK$6.6 billion (US$844 million) to buy out Asahi Group Holdings’ stake in Tsingtao Brewery, becoming the second biggest shareholder in the Chinese beer producer, according to the company’s filing to the Hong Kong exchange, confirming the previous report by South China Morning Post.

Fosun International , together with its wholly and majority owned subsidiaries, agreed to buy 243.1 million H shares, or 37.11 per cent of Tsingtao’s issued capital, giving it close to 18 per cent of the brewery, while China’s state-owned Tsingtao Brewery Group retains the largest stake .

The acquisition, although it marks a homeward shift from Fosun’s previous overseas shopping spree, is consistent with the group’s major business areas and its push to focus on China’s expanding middle class and their consumption of financial services, leisure and travel and as well as what Fosun calls the “pursuit of happiness.” Fosun and its Beijing Sanyuan Foods unit bought St Hubert, a French margarine producer, from Montagu Private Equity for about 600 million euros (US$702 million), according to a Bloomberg report.

In Tsingtao, Fosun finds a century-old brewery that is grappling with changing consumer tastes, as a younger generation of drinkers flock toward craft beer, wine and other premium labels instead of working-class beverages. Still, Tsingtao’s distinctive green bottles and cans - the only Chinese beer brand that can be consistently found outside mainland China - has the largest share of China’s beer market at 29.3 per cent as of last year, according to Kantar Worldpanel’s data. Overseas sales made up 2 per cent of Tsingtao’s 2016 revenue, according to UBS AG’s analysis.

The brewery’s revenue fell 1.6 per cent in the first three quarters to 22.66 billion yuan, while net profit rose 35 per cent to 1.87 billion yuan.