Asahi Group Holdings is eying a sale of its 19.9% stake in Chinese second largest brewer Tsingtao. Morgan Stanley was appointed to advise on the potential sale. The Japanese drinks company is disappointed about the synergies for its own business and sees no further strategic value in the investment. In addition, Tsingtao is increasingly experiencing competition from high priced craft and premium beers on one side and low priced volume brands on the other side, squeezing the middle priced market of Tsingtao and leaving no space for future increase in earnings.
A sale could bring about HK$8 billion ($1.1 billion) into the coffers of Asahi, money much needed to finance the costly purchases of breweries from AB InBev in Europe.
Ashai bought the minority stake in Tsingtao in 2009 for about HK$5.17 billion ($667 million) from AB InBev in order to promote its flagship brand Asahi Super Dry in the world’s largest beer market. “Unfortunately, Tsingtao is not selling ‘Super Dry,’” Asahi’s President Akiyoshi Koji said in a recent interview and continued that he learned that “ownership without control doesn’t make much sense.”
At least, the lesson will bring Asahi an extra revenue of more than $400 million in 8 years. This is much better than Japanese competitor Kirin, who will most likely lose about $380 million in six years with the sale of its unfortunate investment in Brazilian brewer Schincariol (Brazil Kirin) to Dutch brewer Heineken.