Hong Kong: The Asia affiliate of Dutch brewing giant Heineken NV said on Friday, 28 January 2005, that it is still in talks to boost its 21% stake in Chinese beer maker Kingway Brewery Holdings Ltd.

Earlier on Friday, Kingway said that its parent, GDH Ltd., would not give up control of the company to Heineken, quashing speculation of a full-blown takeover and sending shares in Kingway skidding by as much as 11.3%. Kingway said its parent company, Guangdong Holdings Ltd., which is controlled by the Guangdong provincial government, had "no intention to relinquish control over the company."

But a spokeswoman for Heineken Asia Pacific Breweries said talks to boost the firm's Kingway stake are ongoing. "We are in preliminary talks," spokeswoman Sarah Koh told Reuters.

Heineken already holds a 21.44% stake in Kingway. Many in the market expected both companies to announce a deal this week enabling the Dutch company to strengthen its position in the mainland China beer market. Kingway said the talks with Heineken are still at a "very preliminary stage" and may or may not lead to an acquisition.

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