Asahi Group Holdings Ltd. (2502) said Tuesday that it will sell its entire 55% interest in China’s Hangzhou Xihu Beer Asahi Co., or Hangzhou Beer, due to a disagreement with its local joint venture partner.
The Japanese brewer will hand over the shares, which are held by a Hong Kong subsidiary, to joint venture partner China Resources Snow Breweries (China) Investment Ltd. It will also sell its stake in Hangzhou Beer’s production subsidiary, Zhejiang Xihu Beer Asahi Co., to the Beijing-based brewer.
The total value of the sale is 300 million yuan, or roughly 3.7 billion yen. The transfer of shares is expected to be completed by the end of September.
Asahi invested in Hangzhou Beer in 1994 to bolster its Chinese operations. China Resources Snow Breweries took a 45% interest in the firm last November by buying stock through a public bidding process.
Talks were then held toward creating a three-way partnership between Asahi, China Resources Snow Breweries and Tsingtao Brewery Co. — a rival of China Resources Snow Breweries that is 20%-owned by Asahi. However, these negotiations apparently fell through.
In a statement, Asahi said it is selling off the Hangzhou Beer shares because “continuing the current management amid an unstable shareholder situation would lead to a decline in corporate value.”
In addition to its stake in Tsingtao Brewery, Asahi has four beer-making facilities in the Chinese cities of Beijing, Yantai, Shenzhen and Hangzhou. By withdrawing from management of Hangzhou Beer, Asahi will lose sales volume equivalent to slightly more than 10% of the total for its four Chinese facilities.