DEALS
Zhong Lun Advised on Selling of Beer Business and Assets by Kingway Brewery Holdings Limited
Zhong Lun Advised on Selling of Beer Business and Assets by Kingway Brewery Holdings Limited
Kingway Brewery Holdings Limited (“Kingway", a listed company on Hong Kong Stock Exchange, HKEX: 124) and China Resources Enterprise Limited (“CRE", a listed company on Hong Kong Stock Exchange, HKEX: 291), on February 5th, 2013, have announced respectively that China Resources Snow Breweries Limited (“Snow Breweries"), a subsidiary controlled by CRE, acquired Kingway’s beer production, distribution and sales business, including the assets and debts of seven breweries, for a consideration of RMB 5,384,000,000.00.
Zhong Lun Law Firm, as the PRC full-service legal counsel for Kingway’s selling of its beer business and related assets, has provided counseling services covering deal structure design, due diligence, drafting of transaction documents and corresponding negotiations, etc. Zhonglun team led by Partner ZHI, Hui, including Associate YU, Huaming, YIN, Jian, HUANG, Xiandao and ZHOU, You in Shenzhen Office and assisted by Counsel LIN, Kemin in Shenzhen Office, Associate WEN, Xiaotong in Beijing Office, ZHANG, Zixing and YANG, Na in Guangzhou Office, and LI, Lu in Chengdu Office, offered full and professional legal services for the acquisition.
Kingway, controlled by Guangdong Holdings Limited and specialized in beer production and sales, owns Shenzhen Kingway Brewery Co., Ltd., Shenzhen Kingway Brewing Co., Ltd., Kinway Brewery (Shan Tou) Co., Ltd., Kingway Brewery (Dongguan) Co., Ltd., Kingway Brewery (Tianjin) Co., Ltd., Kingway Brewery Group (Chengdu) Co., Ltd. and Kingway Brewery (Foshan) Co., Ltd., with an annual beer production capacity of 200,000 tons each and 1,600,000 tons in total.
Kingway had been considering selling its assets in 2011 due to recent intense competition in beer industry and its major shareholders’ adjustment of development strategy until it officially made a public tender invitation announcement in the early 2012. Kingway became the hottest seller at the moment and large enterprises including Snow Breweries, Tsingtao Brewery Co., Ltd. (“Tsingtao Beer"), Yanjing Beer, Anheuser-Busch InBev and Zhujiang Beer competed to be the buyer during the tender invitation for the last two years. Snow Breweries eventually won the tender out of its strong financial capacity.
Kingway’s selling is also known as the biggest acquisition in the industry during recent years with a significant impact on the national and especially the considerable Guangdong beer market. Snow Breweries, with only one beer production base in Guangdong, ranked just sixth with regard to its market share, while Zhujian Beer, Tsingtao Beer, Kingway, Budweiser and Yanjing Beer occupied the top five places in Guangdong beer market with respect to their beer output before the selling; it is now expected to expand and become the 3rd biggest breweries in Guangdong among its competitors following Qsingtao Beer after the selling, thanks to Kingway’s goodwill, high production capacity and broad marketing channels in South China.
