Akiyoshi Koji, president of Japanese beer maker Asahi Breweries Group, said recently that Asahi will review its investments in China, including its minority stake in Tsingtao Brewery Co., Ltd., citing dissatisfaction with the current investment relationship.

In 2016, Asahi became the most active buyer in the market following the merger of Anheuser-Busch InBev and SABMiller. In the second half of last year, Asahi acquired several European beer brands divested by Anheuser-Busch InBev through two deals, spending nearly 10 billion euros, setting a new record for overseas M&A in Japan's beer industry.

After the acquisitions, Asahi will become the third-largest beer maker in the European market (excluding Russia), behind Heineken and Carlsberg. However, the large-scale M&A deals have also caused Asahi's debt to surge, with net debt rising to more than five times its EBITDA. Koji said Asahi will finance the acquisitions through bank loans and bond issuance.

Asahi is currently the second-largest shareholder of Tsingtao Brewery. In 2009, Asahi purchased a 19.99% stake in Tsingtao Brewery for $666.5 million. Tsingtao is China's second-largest beer maker, trailing only China Resources Beer (Holdings) Co., Ltd., which owns the Snow brand.

Last Wednesday, Koji said in a media interview that under the current structure, the investment in Tsingtao is purely financial. He hopes to develop a broader business relationship that fully utilizes Asahi's technology or brands, and plans to discuss with Tsingtao whether they can establish deeper technical cooperation or sell Asahi's Super Dry beer brand through Tsingtao's channels.

Koji hopes to get an answer by the end of 2017. He did not comment on whether he would choose to sell the Tsingtao stake. However, according to the Wall Street Journal, citing sources familiar with the matter, the possibility of selling the Tsingtao stake exists.

Previously, Asahi had already begun reducing its assets in China.

In September 2016, Asahi sold its 10% stake in joint venture Tingyi (Cayman Islands) Holding Corp. for $330 million, and currently holds about 20% of the company. In December, Asahi also sold its agricultural and dairy companies producing "Asahi Green Source" brand milk in Shandong Province to New Hope Group for over one billion yen.

Although Asahi is one of the best-selling beer makers in Japan, its global market share remains small. According to data from market research firm Euromonitor, Asahi's share of the global beer market in 2015 was only 1.2%.

The acquisition of European beer brands is the first step in Asahi's full-scale global operations. Koji said sales outside Japan will rise from 13% of total sales in 2015 to about 24%.

In October last year, the Vietnamese government said Asahi was one of the overseas companies interested in acquiring Saigon Beer Alcohol Beverage Corp, Vietnam's largest state-owned brewer. The bidding price for this target could exceed $1.8 billion (approximately 12.36 billion yuan). However, Koji did not respond to this news.

Source: Jiemian -END-