CICC Assists Chongqing Breweries to Consolidate Carlsberg's Unlisted Controlled China Brewery Assets

2020-10-13Corporate News

Chongqing Breweries consolidated its own assets and Carlsberg's unlisted controlled China brewery assets into one integrated platform through a JV structure. The transaction marks the overall integration of Carlsberg’s China brewery business. After completing the deal, CBC will gain control over all of Carlsberg’s business in China, with greater synergy in terms of scale, geographic presence, brand portfolio, supply chain and distribution. Carlsberg will ultimately resolve its non-compete undertaking after completion of the deal. In this transaction, CICC acted as sole independent financial advisor of Chongqing Breweries.

This is the first transaction by a foreign multinational corporation to consolidate all its core Chinese business into an A-share Listed company.

Transaction Overviews

Chongqing Breweries Co., Ltd. (“CBC” or the “ListCo”, 600132.SH) has successfully acquired remaining 48.58% stake in CBC-controlled JV Chongqing Jianiang via cash from Carlsberg as the first step, followed by CBC and Carlsberg injecting assets to Chongqing Jianiang in exchange for shares, with remaining Carlsberg-controlled Chinese assets acquired by Chongqing Jianiang via cash to fully consolidate all Carlsberg China brewery assets into one platform. After completion, CBC and Carlsberg will hold 51.42% and 48.58% equity in Chongqing Jianiang respectively.

About Chongqing Breweries

Chongqing Brewery was established in 1958 and is mainly engaged in the manufacturing and sales of beer products. So far, it controls 13 breweries and has shareholding in 1 brewery located in Chongqing, Sichuan and Hunan. The company owns two local brands, “Chongqing” and “Shancheng”, which are popular among consumers, and is in a leading position in its core regional market. After becoming a member of the Carlsberg Group since 2013, it started to produce and sell Tuborg, Carlsberg, K1664 and other brands in China, establishing a brand matrix of “local power brands + international premium brands”.

The deal will significantly help CBC expand its geographic presence and achieve national footprint, improve efficiency in the supply chain, production and distribution, expand brand portfolio and become one of the few market participants that owns the combination of "local power brands + international high-end brands" in the Chinese beer market, as well as strengthen the leading position in the market of premium beers.

The renovated JV structure allows CBC-controlled JV Chongqing Jianiang to gain control of Carlsberg China’s business with a combined asset acquisition of ~13bn RMB. The deal constitutes a win-win situation for CBC and Carlsberg.

The deal follows market principles and fully considers the interest of minority shareholders. The deal induces a significant EPS accretion and increases asset scale tremendously. The convincing impact to CBC is beneficial to CBC and CBC's shareholders in the long term. 

CICC designed and optimized a delicate JV transaction structure with less funding required and a simplified regulatory approval process, which allows Carlsberg to fulfill its non-compete undertaking in a low-cost and highly efficient manner.

Given the high level of complexity of this transaction, CICC specifically worked out a communication plan and prepared supporting materials with all the transaction details, successfully facilitated the regulatory approval process through multiple rounds of commutation with the Stock Exchange, local governments and other relevant authorities. As a result, CICC facilitated a comprehensive understanding of the deal structure for the regulators, improving the efficiency of the examination process.

As the sole independent financial advisor and the project leader, CICC made significant contribution to the successful and timely completion of this landmark MAR transaction in the Chinese equity market by providing a well-designed deal structure and efficient project execution in coordination with other professional advisors.

Riding on its in-depth understanding of the consumer industry, international strategic vision, and excellent service,CICC successfully gained acknowledgement from CBC and its controlling shareholder Carlsberg Group. This is another typical transaction of CICC serving the MNC client after ABInBev, Yum Brands, Diageo, and Reckitt Benckiser. This transaction has further strengthened CICC’s leading position in investment banking services in the global consumer industry.

As a leading investment bank with “Chinese Roots, International Reach”, CICC will continue to utilize its capital market expertise as well as its seamless cooperation of onshore and offshore businesses to provide customized and top-notch capital market support to our customers in terms of introduction of global investors, reaching international capital market and promoting global business development.