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AB InBev will try to keep SABMiller's stake in China's Snow brand

January 28, 2016
Food & Drink

(Dow Jones Newswires) – Anheuser-Busch InBev NV will try to defy conventional wisdom and hold on to SABMiller PLC’s China beer business CR Snow, according to two people familiar with the company’s plan.

The idea flies in the face of analysts’ expectations that AB InBev would be forced to divest Snow, the world’s No. 1 selling beer by volume, in order to secure regulatory approval in China for its roughly $108 billion takeover of SABMiller.

Snow, a mild domestic lager, is mostly sold in China, so few people know of it outside the country. Yet it could be the most strategic asset SABMiller holds. Snow has grown rapidly as Chinese have increased their beer consumption to an average of 45 liters from 7 over the past 25 years, according to Deutsche Bank.

The future of Snow will be determined in talks that are taking place between AB InBev and China Resources Enterprise Ltd., which owns 51% of the joint venture CR Snow, people familiar with the process said. In those discussions, AB InBev will seek to hold on to its stake in the joint venture and secure operational control, according to the two people familiar with the plan.

Keeping the business won’t be easy. China Resources has the first option to buy out CR Snow and has hired Nomura Holdings Inc. as an adviser, according to a person familiar with the hiring as well as one of the people familiar with AB InBev’s plan. Nomura valued SABMiller’s 49% interest in CR Snow at $3.6 billion in an analyst report.

AB InBev declined to comment. China Resources didn’t respond to requests for comment.

By Tripp Mickle

Source: Wall Street Journal

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