Brewery says it prefers Anheuser-Busch bid

Thursday, June 3, 2004

SHANGHAI, China -- The Chinese brewery at the center of a takeover battle between the world's two biggest beer makers said Wednesday it prefers the most recent bid by Anheuser-Busch Cos. Inc.

In a notice issued to the Hong Kong Stock Exchange, Harbin Brewery Group Ltd. urged shareholders to shun a lower unsolicited bid by SABMiller PLC, maker of Miller Lite and the world's second largest beer brewer behind Budweiser-maker Anheuser-Busch.

"The board announces that it fully supports the Anheuser-Busch offer and warmly welcomes Anheuser-Busch becoming a strategic partner of the company," said the statement issued by Harbin Brewery, a 100-year-old beer maker based in the northeastern city of Harbin.

St. Louis-based Anheuser-Busch stepped up the battle for control of the Chinese brewery on Tuesday by disclosing it had acquired another 7 percent of Harbin's shares on top of the 29 percent stake purchased last month.

The acquisition gave the U.S. beer giant a 36 percent stake, which under Hong Kong Stock Exchange rules triggers a mandatory offer by Anheuser-Busch for the remaining shares in Harbin Brewery.

Higher offer

The 5.58 Hong Kong dollars (72 cents) per share paid by Anheuser-Busch for the purchase announced Tuesday was nearly 30 percent above an offer of 4.30 Hong Kong dollars (55 cents) made last week by SABMiller.

Harbin Brewery's share price jumped 17 percent to close at a record high of 5.95 Hong Kong dollars (76 U.S. cents) on Wednesday from 5.10 Hong Kong dollars (65 cents) on Monday. Trading in the company's shares was suspended Tuesday pending the Anheuser-Busch announcement.

The bid for Harbin last week by SABMiller, which holds a 29.4 percent stake in the brewery, was the first hostile takeover attempt of a listed Chinese company by a foreign company.

But even at that time, the Chinese company's board said it strongly prefers Anheuser-Busch as a partner.

Anheuser-Busch has nurtured good relations with Harbin, most recently announcing it plans to pay $8 million to a fund to promote economic development in the city.

It said Wednesday that making a strong bid for Harbin Brewery fit with its strategy for China, where it already has strong ties with leading beer maker Tsingtao Brewery.

"We think we make an extremely attractive offer to all Harbin Brewery's shareholders," Stephen Burrows told Dow Jones Newswires.

"China is the largest and fastest growing beer market," he said. "If you want to be a long-term player in the industry, you should have a strong position in China."

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