China Resources Beer (CR Beer) is considering to take a minority stake in Budweiser APAC when AB InBev continues to spin off its Asia unit as planned. The Chinese company has already investigated the scenario and is "paying a high level of attention" of a possible investment, CR Beer’s CEO (Jason) Hou Xiaohai said on Friday. "So far, we haven't arrived at a conclusion," he was quoted by Nikkei Asian Review.
AB InBev announced one and a half months ago to reduce its heavy debt burden by selling part of its Asian business on the Hong Kong stock exchange in a deal that was supposed to be the world’s biggest initial public offering this year (inside.beer, 2.7.2019). However, the company canceled the transaction three days before the first listing “due to several factors, including the prevailing market conditions” (inside.beer, 13.7.2019).
When AB InBev offloaded its Australian subsidiary Carlton & United Breweries to Asahi Group Holdings for USD 11.3 billon just one week later, the company said in a media release: “AB InBev continues to believe in the strategic rationale of a potential offering of a minority stake of Budweiser Brewing Company APAC Limited (Budweiser APAC), excluding Australia, provided that it can be completed at the right valuation” (inside.beer, 19.7.2019).
It is not clear if AB InBev will be happy with a buyer like CR Beer. The Chinese company is part of state-controlled China Resource Group. Tensions between China and the United States have increased lately and U.S. president Donald Trump opposes investments of Chinese companies. While AB InBev is a company based in Belgium, one of its major markets is still in the United States.
But more importantly, CR Beer is since August last year minority owned by AB InBev’s direct competitor Heineken. The Chinese company is producer of the world’s best-selling beer brand Snow but suffered so far from the lack of high-margin premium brands.
Therefore, CR Beer formed last year a strategic partnership with Heineken in which the Dutch brewing giant bought a 40 percent share in its Chinese partner at a price of USD 3.1 billion. As part of the deal Heineken said to grant to CR Beer an exclusive license in China on a long-term basis for its Heineken brand as well as other international brands of the Heineken portfolio. On the other hand, Heineken said to help CR Beer with the international expansion of its Snow brand (inside.beer, 3.8.2018).