Harbin Brewery Criticizes SABMiller; Says Did
Not Honor Its Commitments
The Chinese manangement of Harbin Brewery, the subject
of a hostile takeover match between SABMiller and Anheuser-Busch,
issued a strongly worded criticism of SABMiller. Harbin
basically said that SABMiller's strategic investment in
the company last year had not produced any meaningful
benefits and results.
Peter Lo, chief executive of the company, said that SABMiller
promised Harbin that the strategic alliance would benefit
the company because of cooperation with local rivals run
by its joint venture partner China Resources group. SABMiller
purchased 29 percent of the company in 2003.
The Harbin management has openly sided with the offer
made by Anheuser-Busch.
London-based SABMiller has said that if its offer is
accepted, Harbin would benefit from synergies with companies
owned by China Resources. The attack by Peter Lo amounts
to a direct rebuttal of the company's claims.
SABMiller has missed two offers to purchase Harbin Brewery
at lower prices. The company made an offer of HK$4.30
per share, but the heated battle has sent prices to HK$4.875
on the Hong Kong Stock Exchange, well above the SABMiller
offer.
Anheuser-Busch has hinted that it will make a higher
counterbid, but is obviously enjoying the unfavorable
publicity the high-profile hostile takeover battle is
making for SABMiller. It has a stake in Tsingtao Brewery,
maker of Tsingtao beer, China's only international brand
beer, and has made a point that it has consulted with
Tsingtao before making the offer. Tsingtao said it was
fully consulted by Anheuser-Busch before the move, and
fully supported Anheuser-Busch's move for a stake in Harbin
Brewery.
Coverage in the Chinese media of the fight makes it seem
like SABMiller is only interested in making a quick deal
when the focus of SABMiller management has shifted to
China, without considering the changes taking place in
the Chinese beer market. The subtext is that this confirms
Chinese distrust of foreign investors and management,
who look for a quick profit and do not consider the benefit
to the Chinese.
The depth of the Chinese managements' frustration at
SABMiller was revealed by the revelation that Peter Lo,
and five others, stood to make a windfall of HK$110M if
the deal went through. They own five percent of the shares
SABMiller used to buy its 29 percent stake, and special
provisions, doubling the value of their options and bringing
the exercise date forward would kick in if SABMiller made
a purchase of Harbin. The exact terms of the special provisions
have not been revealed.
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