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Food & Beverage

Fosun picks up Asahi's stake in Tsingtao as it turns to food, beverages

Shares of Shanghai-based buyer spike, while Chinese brewer dips to reflect discount

A shelf full of Tsingtao beers is a common sight at Chinese supermarkets.

TOKYO -- Japanese beverage company Asahi Group Holdings will unload its entire stake in Tsingtao Brewery to Fosun International and others, having failed to leverage its capital tie with China's second-largest beer producer.

The move gives Fosun a stake in an age-old Chinese brand and marks its biggest foray into the food and beverage sector to date.

Asahi said Wednesday that it signed deals to sell nearly 20% of the brewer to multiple parties, including Fosun International, for about 106 billion yen ($935 million). The liquidation is to be completed by March. Asahi expects to book some 6.3 billion yen in profit from the sale in the year ending December 2018.

Shanghai-based Fosun is best known for real estate development, but its portfolio also includes pharmaceutical and financial businesses. Co-founder Guo Guangchang is known as the "Warren Buffett of China" for his aggressive acquisitions.

Since Tsingtao's selling price was set at 27.22 Hong Kong dollars per share -- discounted 32% from Wednesday's close of HK$40.00 -- Fosun shot up 8.6% on Thursday to close at HK$17.64. Market participants noted the deep discount given Fosun and were surprised by the move. Francis Kwok Sze-chi, managing director at Freeman Securities in Hong Kong, told NQN, "The acquisition was unexpected, as Fosun's strength lies in the pharmaceutical sector."

Conversely, Tsingtao dropped 6.4% to HK$37.45 on Thursday in Hong Kong while falling 1.5% to close at 36.0 yuan in the dual-listed Shanghai market. Asahi, meanwhile, remained virtually unchanged, closing at 5,725 yen, or 0.7% higher than at the end of trade on Wednesday in Tokyo.

Asahi obtained the Tsingtao stake in 2009 from global beer leader Anheuser-Busch InBev for about 60 billion yen. The beverage company considered tapping Tsingtao's sales channels, but this never came to fruition as relations between Japan and China worsened. As a result, China has accounted for less than 10% of Asahi's overseas sales, despite being the world's largest market.

The Japanese company will devote more resources to its European operations. Asahi bought European brewery businesses from Belgium-based Anheuser-Busch for a total of about 1.2 trillion yen through spring of this year, lifting its ratio of overseas sales to around 30% from 15%.

Asahi also aims to boost sales of European beers and its mainstay Super Dry beer in Asia and elsewhere. In China, the company will use its own sales channels to sell Super Dry and cultivate the upscale segment of the country's beer market.

The Japanese brewer previously sought to bolster its presence in Asian markets by collaborating with local partners, but these efforts failed to create deep synergies as tie-ups through minor stakes did not provide sufficient control over joint efforts.

Asahi is re-examining its partnership strategies. In October, the company began talks to sell its stake in an Indonesian beverage joint venture to the local partner. Asahi dissolved a beverage joint venture in China this month.

NQN staff writer Noriko Okemoto in Hong Kong contributed to this story.

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