Photographer: Qilai Shen/Bloomberg

Tsingtao Brewery Jumps as Asahi Puts China Stake Up for Sale

Updated on
  • Asahi may sell all or part of 20 percent stake in Tsingtao
  • The move could revive ‘laggard’ Tsingtao, Mizuho’s Yeo says

Shares in Tsingtao Brewery Co. climbed the most since May after Asahi Group Holdings Ltd. went public with its plans to put a minority stake worth $1.2 billion in the Chinese brewer on the selling block as Japan’s largest brewer focuses on growth in Europe.

Confirming a Bloomberg report in January on the appointment of Morgan Stanley as Asahi’s adviser on a sale, the beermaker said Thursday that it has started evaluating a potential transfer of all or part of its 20 percent stake in Tsingtao, without specifying a buyer or a selling price. Asahi may sell the holding at auction, said Takuo Soga, spokesman for the Japanese company.

Tsingtao’s Hong-Kong listed shares climbed as much as 6.8 percent to HK$33.60 on Friday. Meanwhile, Asahi’s shares increased as much as 2.6 percent in Tokyo, bringing its gains in the year to about 36 percent.

“Tsingtao investors are buoyant because the feeling is that if Asahi is now making it public, the sale may be close and there may be a buyer,” said Daiwa Capital Markets analyst Anson Chan. “There had been a concern that there was little interest in the minority stake.”

Tsingtao Struggles

Asahi’s 2009 investment in the Chinese brewer hasn’t been a boon for the Japanese company. Tsingtao doesn’t make or sell at large-scale Asahi’s top-selling “Super Dry” brand in the world’s biggest beer market. Tsingtao has also struggled to maintain its position among Chinese drinkers looking for more premium brews as foreign competitors Anheuser-Busch InBev NV and Diageo Plc gain ground.

At the same time, Asahi is looking to Europe and other markets for growth, where it acquired about $11 billion in beer brands from Anheuser-Busch InBev last year as demand wanes at home in Japan.

Click here to read why Asahi’s Tsingtao sale shouldn’t make investors that merry.

Asahi’s holding, valued at $1.2 billion based on Thursday’s closing price in Hong Kong, is “a minority stake with passive control,” and unlikely to interest foreign buyers, said Bernstein analyst Euan McLeish. In a January interview, Asahi President Akiyoshi Koji said that “ownership without control doesn’t make much sense,” referring to the company’s minority stake in Tsingtao.

For Tsingtao, the change of hands “could mean potential improvement to the company’s fundamentals if they sell the stake to a new strategic investor such as another major beverage maker,” said Jeremy Yeo, an analyst at Mizuho Securities Asia Ltd. in Hong Kong. The Chinese company has been a “laggard,” and a new strategic partner could improve things, he said.

Asahi is also shedding other assets in Asia. In June, the company announced it would sell its remaining stake in Chinese beverage joint venture Tingyi-Asahi Beverages Holding Co. for $612 million. Earlier this month, Asahi also signed a non-binding letter of intent to sell its stake in two Indonesian beverage ventures.

The company is ramping up sales of “Super Dry” in Europe, and will produce the lager in Italy ahead of schedule, Koji said last month.

— With assistance by Rachel Chang, Emma Dai, Lisa Du, and Grace Huang

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