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Stake sale helps brewer cut debt

Anheuser-Busch InBev NV, the world's largest beer maker, agreed to sell the majority of its stake in Chinese brewer Tsingtao Brewery Co Ltd to Japan's Asahi Breweries Ltd for US$667 million to help reduce debt.

The Japanese brewer will acquire 19.9 percent of Tsingtao, reducing Anheuser's stake to 7 percent, the Leuven, Belgium-based company said yesterday in an e-mailed statement. The purchase price of HK$19.78 (US$2.55) a share is 38 percent above Tsingtao's closing price on Thursday of HK$14.38, the statement said.

The Belgian brewer aims to sell non-core assets to help repay US$45 billion of debt taken on in last year's Anheuser-Busch takeover. The company has also issued bonds to help repay a US$7-billion bridge loan that is due in November. Asahi is expanding outside Japan as beer sales drop at home and agreed in December to buy Cadbury Plc's Australian beverages unit.

"This is a substantially higher price than I had anticipated and a very good result" for Anheuser, Andrew Holland, an analyst at Dresdner Kleinwort in London, said yesterday. "The Japanese market is in long-term decline and Asahi is finally realizing they need to look outside the country." Holland has a "hold" recommendation on Anheuser shares.

The Belgian brewer "remains strongly committed to China, the largest beer market in the world," Chief Executive Officer Carlos Brito said in the statement. It also has the Harbin and Sedrin beer brands in the Chinese market, according to Bloomberg News.

Asahi plans to build "a more progressive and long-term partnership with Tsingtao," the Tokyo-based company said in a separate statement. The Japanese brewer is "taking advantage of Tsingtao's brand power and strong business base in the Chinese beer market."

Asahi also disclosed that it is also looking to strengthen the distribution network of its own beers in China.


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