China: InBev acquires 100% ownership of K.K.
InBev S.A. announced on September 2 that it has acquired the remaining 30% interest in K.K.'s brewing activities, located in the Zhejiang Province in China. This transaction enhances InBev's position in the province -where InBev holds a 50% market share- and represents a further step in InBev's move to consolidate and strengthen its position in China.
InBev acquired a 70% stake of the K.K. brewing activities in April 2003. The K.K. breweries are located in the city of Ningbo, 200 km south of Shanghai. KK is a leading brewer in the Province of Zhejiang and holds an 80% market share in the city of Ningbo, the second largest harbour in China, after Shanghai.
K.K.'s breweries have a capacity of 3 million hl and produced 2.7 million hl in 2004. The company's main brands are K® and Zizhulin®, the leading standard lagers, and the premium brands K.K.® and One Week®. K.K.'s brewing operations include two breweries in Ningbo and Zhoushan, and one bottling line in Yuyao.
The cost of acquiring 100% blended ownership of the company represents an EV/EBITDA multiple of 4.1x and an Enterprise Value per hectoliter capacity of 18.4 USD. The total consideration is 61.5 million USD.
"We are very pleased with obtaining 100% ownership of one of our largest and most profitable operations in China." said Brent Willis, InBev's Zone President Asia Pacific.
InBev focuses in China on the more affluent South Eastern provinces of Zhejiang, Guangdong, Hubei, Hunan, Hebei, Jiangsu and Shangdong. InBev's longstanding interaction with its Chinese partners has provided the company with strong local relationships and a good understanding of the Chinese beer market. InBev has been active in China since 1984, and is currently the country's third largest brewer.
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