Friday, 8 May 2009
Asahi Attempt to Acquire Tsingtao May Be Bitter Cup for the Japanese Company
Not long after the rejection by the Ministry of Commerce (MoC) of Coke’s attempt to acquire Huiyuan, Tsingtao Beer, a more famous Chinese international brand, may be about to fall under the control of a foreign company. And this time, that company is Japanese, which could trigger all sorts of nationalistic fervour in the volatile Chinese.
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Asahi Attempt to Acquire Tsingtao May Be Bitter Cup for the Japanese Company
CSC staff, Shanghai
7 May 2009
Not long after the rejection by the Ministry of Commerce (MoC) of Coke’s attempt to acquire Huiyuan, Tsingtao Beer, a more famous Chinese international brand, may be about to fall under the control of a foreign company. And this time, that company is Japanese, which could trigger all sorts of nationalistic fervour in the volatile Chinese.
Tsingtao Beer’s second largest shareholder, InBev, a subsidiary of Anheuser-Busch InBev, the world’s largest brewer, declared in February this year its intention to sell its 19.9% stake in Tsingtao Beer to Japanese beer maker Asahi, which already holds a 7.09% stake in the company. After the deal is finished, Asahi’s holdings in Tsingtao Beer will total 26.99%, closing in on the 30.89% stake of Tsingtao Beer Group, Tsingtao Beer’s parent company.
Although the deal was reported long ago, the Chinese media have recently drug it up again, triggering a small, so far, wave of nationalistic emotion.
Since the MoC has set no limits on equity trading between InBev and Asahi, and between Tsingtao Beer and Asahi, Asahi may easily be able to acquire another 3.99% stake to become Tsingtao’s largest shareholder. At present, Tsingtao Beer’s market share is only 20%, so if the MoC wants to stop Asahi from seeking control of the company, it will have to come up with some other excuse besides anti-monopoly.
Although Tsingtao Beer claims the change of equity is a normal operation on the capital market, Chinese consumer nationalism again well toss a spanner in the works. A survey on China’s largest portal website revealed that about 86% of the people surveyed oppose Asahi becoming even Tsingtao Beer’s second largest shareholder, and almost 70% of the people surveyed said they would never again drink Tsingtao Beer, China’s most popular beer with the longest history.
Asahi, one of Japan’s largest beer makers, entered the Chinese market in 1993, and its production capacity in China totals about 550,000 kilolitres. It also has investments in other industries such as agriculture, dairy, and beverage.
Asahi’s cooperation with Tsingtao Beer started in 1997, when the two set up a joint venture, Tsingtao Asahi, in Shenzhen, with Asahi taking a 40% stake. In 2002, Asahi began to sell Tsingtao beer through its channels in Japan. In November last year, Tsingtao Beer took a 39% stake in China’s Yantai Beer, in which Asahi owns 51%. Asahi has also formed a joint venture with a subsidiary of Tsingtao Beer, holding a 60% stake in it.
It was rumoured InBev had attempted to acquire Tsingtao Beer’s H-shares to become the controlling shareholder of the company. This news, while never confirmed, had the management of Tsingtao Beer worried. However, at the end of last year, the MoC barred InBev from increasing Anheuser-Busch’s stake in Tsingtao Beer when approving InBev’s acquisition of the American brewer.
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