SABMiller vs. Anheuser-Busch: The Takeover Battle for Harbin Brewery

Harbin strongly advised its shareholders to take no action on SABMiller's offer in haste as the company's board was considering better options. At the same time, Harbin's management welcomed AB's acquisition of 29.1% in the company and stated that it preferred AB to SABMiller as its major shareholder, as it believed that Harbin was unlikely to gain any significant benefits under SABMiller's control. In other words, it urged shareholders to spurn the offer. SABMiller challenged the Harbin board's open statements recommending shareholders not to take action on the bid and vociferously preferring AB. The company's spokesman, Fairbrass said, "The Harbin management team needs to explain why they think our offer undervalues their business..."

In the light of AB's announcement that it would not combine the operations of Harbin with Tsingtao, and with both AB and SABMiller competing in Northeast China (through Harbin and CRB respectively), analysts expected profit margins, already very low in China, to get much thinner. Commenting on this, Lilian Leung, analyst, ING, said, "Competition will intensify in China's North Eastern market. Ultimately, it is negative for Harbin and CRB. It will be difficult to improve their profitability." However, some analysts supported AB's move saying that it was important for AB to have a strong hold in China, especially because of change in customer preferences towards wine and distilled spirits and the saturating market for beer in the US...