Repurchase and Suntory equity joint venture company to integrate resources to deal with Anheuser-Busch Brewery competition

Updated: October 20, 2015  Views: 32

Repurchase and Suntory equity joint venture company to integrate resources to deal with Anheuser-Busch Brewery competition

Our reporter Zhang Xu in Beijing

Suntory evacuate Chinese beer market, Tsingtao Brewery (600600.SH) choose to take over the overall.

October 18 evening, Tsingtao Brewery [microblogging] announcement that intends to cash Suntory (China) Investment Co., Ltd. held Suntory Tsingtao Brewery (Shanghai) Co., Ltd. (Suntory Tsingtao) and Tsingtao Brewery Suntory (Shanghai) each a 50% stake sales Limited (Tsingtao Suntory), the purchase price was 823 million yuan.

October 19, Tsingtao Brewery official told the 21st Century Business Herald Reporter: Through this acquisition, Tsingtao Brewery will further enhance the integration of operational capability, synergy, enhance Shanghai and Jiangsu market share.

Beer marketing expert Vincent Fang also told reporters that the acquisition of shares of Tsingtao two joint venture companies, on the one hand to consolidate in Jiangsu, Shanghai and other places of the market, it also can increase sales and performance.

Tsingtao Brewery semi-annual report, the first half of this year, Tsingtao Brewery in Shanghai, Jiangsu Province, East China dominated sales appear sharp decline 15.17 percent, much higher than in other regions, while the Qingdao Beer trying through this capital to withstand competition Anheuser-Busch InBev re-consolidate the East China market.

Two joint venture companies to acquire equity

For the acquisition, Qingdao Beer officials said, mergers and acquisitions, integration, expansion, is an important measure to increase market share, to further improve the layout of the domestic market, access to capacity for sustainable development of great significance.

Suntory Suntory Tsingtao Chinese joint venture company holds a 50% stake and a majority of seats on the board of the company, the company has control over, holds the other 50% stake in Tsingtao. In addition, Tsingtao Brewery held Suntory sales joint venture 50% stake in the company, the company has control over, Suntory China belong to the minority shareholders of the company.

Tsingtao Brewery acquired information, Tsingtao and Suntory's two joint ventures have been established in early 2013, in order to enhance the market competitiveness of both sides of beer products, Tsingtao and Suntory Chinese production and sales between the two sides in the Shanghai and Jiangsu provinces in the art integration subsidiary, jointly established the Suntory Tsingtao Brewery (Shanghai) Co., Ltd. and sales joint venture.

Audited assessment, Suntory Brewery joint venture on June 28 audited net assets of 2.658 billion yuan, while the legal requirements for asset valuation through the value of 2.854 billion yuan to 50% stake in the assessment of the value of China's holdings of Suntory 14.27 billion.

The first half of 2015, the joint venture company Suntory Brewery turnover 1.269 billion yuan, net profit of 9.4493 million yuan.

In addition, Tsingtao, Suntory sales joint venture in June 28 audited net assets of -13.27 million, a 100% stake in a joint venture selling the assessed value of -6.16 billion. Tsingtao, Suntory sales joint venture in the first half of this year sales 1.52 billion yuan, net profit loss of 128 million yuan.

Vincent Fang said the joint venture acquisition of Tsingtao equity firms, one can consolidate in Shanghai, Jiangsu market position, on the other hand can improve sales performance and sales. Since each party holding a 50% stake, there is no absolute control, synergies playing well.

'Suntory strategic withdrawal from the Chinese beer market, the business now turn to the whiskey, while beer business of small plates, it has no major development in terms of prospects.' 史贤龙 beer marketing expert, told reporters.

While Suntory exited two joint ventures, and exit the Chinese beer market operations, but Suntory brand names will continue to use the authorization Tsingtao. Tsingtao said the two sides in accordance with the licensing agreement, the two sides agreed in the region and an exclusive license to use the period Use 'Suntory SUNTORY' trademark and technical and sales Suntory brand products.

Integration of resources to deal with competition

In fact, Tsingtao integration and joint ownership of the company Suntory well prepared.

Reporters from the Qingdao Beer aspect to understand, as early as January 5 this year, Tsingtao stake in the company and Suntory signed a letter of intent transaction, Tsingtao Brewery plans to acquire a 50% stake in each of two joint venture companies.

Suntory for the acquisition of the joint venture held by China, the official said Tsingtao, Shanghai and Jiangsu Province, Qingdao beer market are important, after the transaction is completed, the two joint venture will become a wholly owned subsidiary of the Company, can be eliminated original before continuing connected transactions. At the same time, it will further enhance the integration of operational capabilities, synergies, improve the overall operational efficiency of assets.

Tsingtao Brewery, a joint venture with Suntory two joint venture companies, the purpose is the use of their resources, brands, channels, etc. to enhance the region's competitiveness in the East. However, since the establishment of two joint venture companies, only Suntory Brewery joint venture profits, and Tsingtao, Suntory marketing joint venture company has been losing money in. This is clearly not in line with the original intention of cooperation.

Tsingtao Brewery HKEx announcement shows, Tsingtao, Suntory marketing joint venture was set up in 2013 a loss of 564 million yuan, the 2014 turnover of 3.009 billion yuan, net profit loss of 228 million yuan.

For this acquisition, Oct. 19 China Merchants Securities released a research report said: 'We in Tsingtao and Suntory when he proposed joint venture may be the final result, the Shenzhen factory cooperation Asahi and Tsingtao already provides a model, but unfortunately Suntory would like to just toss a few years. '

Although Tsingtao, Suntory 2014 marketing joint venture with annual sales of 3.0 billion, but profits are loss of 230 million yuan, the acquisition is expected to directly affect short-term increase of the deficit report, which then through collaborative integration to reduced losses. Although Tsingtao, Suntory acquired long-term positive genus, but the company in recent years in South East and other markets retreat can rely on this problem is not solved.

In the first half of this year, operating income of 16.07 billion yuan Tsingtao Brewery net profit of 1.2 billion yuan, down 5.2 percent, respectively, 14.7%, while in the main business market in Shandong, north, south, southeast, east and other regions have different degrees of decline in sales , where sales fell 15.17 percent in east China.

Guotai Junan study reported that Qingdao Beer east, southeast and south China market decline in performance was largely affected by the competitive impact of large Anheuser-Busch InBev. Anheuser-Busch InBev China sales in the same period of endogenous growth of 1.7%, revenue increased 10.2%.

However, Shixian Long believes that Anheuser-Busch InBev is a capital-based company, mainly by the acquisition of expansion, from the market perspective, the threat is not so great for Tsingtao.

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