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28 January 2004 APB Extends Presence In China Market Hong Kong, 28 January 2004 - Three weeks ago, Asia Pacific Breweries Limited (APB) announced intentions to finalise arrangements (subject to shareholders' approval) to combine its operations in China with its substantial shareholders, Heineken and Fraser and Neave, Limited (F&N) and to produce and market Heineken lager in the People's Republic of China (excluding Hong Kong and Macau). Today, Asia Pacific Breweries Limited (APB) further strengthens its strategy for the PRC market by entering into agreements to acquire about 21% stake in one of the most profitable breweries in China, through its associated company, Heineken Asia Pacific Breweries China Pte Ltd (Heineken APB). Heineken APB has entered into agreements to acquire a total of 21% stake in Guangdong Brewery Holdings Limited (Guangdong Brewery). Heineken APB will acquire a combination of 133.768 million new shares in Guangdong Brewery and 165.496 million existing shares from GDH Limited at the price of HK$1.85 per share. GDH Limited is the majority shareholder of Guangdong Brewery. The total acquisition is valued at US$71.3 million, of which APB's 50% share is US$35.7 million; the remaining amount will be borne by Asia Pacific Investment Pte Ltd, the other 50% shareholder of Heineken APB and parent company of APB which is a 50-50 joint venture between Heineken and F&N. Guangdong Brewery is an investment holding company whose subsidiaries produce, distribute and market Kingway beer. It is a leading regional brewer in the Guangdong Province and its major markets include Shenzhen, Dongguan, Pearl River Delta and East Guangdong. In Guangdong, Guangdong Brewery is the third largest brewery in terms of sales volume with a dominant position in Shenzhen and Dongguan. It is also one of the most profitable listed breweries with operations in China. Guangdong Brewery owns two plants in Shenzhen. The first plant was constructed in 1986 and its capacity was expanded to 2 million hectolitres in 1996. A second 2 million hectolitre plant was built in a new industrial zone in the suburbs. In July 2003, Guangdong Brewery announced that it had plans to set up a third plant with an expected capacity of 2 million hectolitres in Shantou, Guangdong province. They expect operations to commence in 2005. Guangdong Brewery is listed on the Hong Kong Stock Exchange. It is 72% owned by GDH Limited. GD Limited is the investment vehicle of the Guangdong government. Commenting on the acquisition, Mr Koh Poh Tiong, Chief Executive Officer, APB and Chairman, Heineken APB said, "The intention is for all of APB's business operations in China to be streamlined under Heineken APB. Pending APB's shareholder approval, Heineken APB will be awarded the licence to commence producing and marketing Heineken lager in the PRC and targets to brew the world-renowned Lager at its breweries later this year." "This partnership with Guangdong Brewery is another step in the crystallisation of our strategy for the China beer market. Its excellent equipment has the potential to brew Heineken lager as well. Heineken APB will work together with Guangdong Brewery to maximize commercial opportunities for the Heineken brand in combination with the strong Kingway brand," he continued. China has the largest beer market in the world with an estimated sales volume of 250 million hectolitres of beer in 2003. The Guangdong market is one of the key provinces that have been identified in APB's strategy for China. With a population of 85 million people, it is one of the largest and wealthiest provincial beer markets in China with an estimated volume of 18 million hectolitres per year. "The partnership with Guangdong Brewery, one of the largest and most profitable brewers in China, will further strengthen the position of Heineken APB considerably. Guangdong Brewery's main brand is Kingway beer which is not only available in the Guangdong province but also in Hong Kong, Macau and Taiwan. Under the leadership of Chairman Ye Xu Quan, the company has made tremendous growth and delivered sterling performances in recent years," observed Mr Koh. Upon completion of the acquisition of the strategic stake in Guangdong Brewery subject to shareholder approval by the Guangdong Brewery shareholders, it will be APB's third brewery interest in China. Its existing two breweries are located in Shanghai and Haikou. "APB will have a 3-pronged growth strategy in place. Firstly, concentrating all our business operations under the Heineken APB umbrella allows us to focus on the China market and make further inroads into the world's biggest beer market. Secondly, the licence to brew Heineken lager in the PRC gives us access to produce and market one of the world's most famous lagers in this market thereby enhancing our existing volumes and improving the profitability of our China operations. Thirdly, we have established an alliance with one of the leading breweries in the fast-consolidating China beer market ," said Mr Koh.
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Newsroom 2004 listing