HONG KONG -- China Resources Beer rallied Wednesday on hopes that its buyout of a joint venture with U.K.-based SABMiller, announced that morning, will help the Chinese brewer boost its presence in the country's massive beer market.
The issue gained as much as 34.6% to a 2015-16 high of 17.20 Hong Kong dollars before ending up at HK$15.10.
China Resources Beer has agreed with Anheuser-Busch InBev, which is acquiring SABMiller, to buy the British brewer's 49% stake in China Resources Snow Breweries, or CR Snow, for $1.6 billion. The deal still awaits regulatory approval and for the acquisition of SABMiller to be completed, and would give China Resources Beer full ownership of the venture.
CR Snow currently has the biggest share in China, the world's largest beer market, followed by Tsingtao Brewery. World leader AB-InBev ranks third in the country. Some had predicted that CR Snow shares could be sold, because AB InBev and the joint venture would together control a sizable share of the Chinese market, possibly exposing them to antitrust scrutiny.
CR Snow saw after-tax profit decline 21% to HK$1.51 billion ($194 million) in 2014. Its net assets at the end of that year came to about HK$27.2 billion.