Tsingtao shares fall on stake sale

The mainland's Tsingtao Brewery Co's shares fell as much as 6.38 percent on Thursday in Hong Kong－the most in almost two years－after Japanese brewer Asahi Group Holdings Ltd agreed to sell its stake in the company to conglomerate Fosun International Ltd.

Asahi Group Holdings said on Wednesday it would sell its entire 19.9 percent stake in Tsingtao Brewery Group Ltd, partly to Fosun and partly to Tsingtao itself, for a total of $937 million.

Analysts have mixed views on the deal. Lincoln Kong from Goldman said Tsingtao would see benefits from collaboration with Fosun in areas including export business, premium branding and management incentives.

The recent surge in Tsingtao's stock may also help explain the decline－the Hong Kong-listed shares gained 26 percent this month through Wednesday to a two-year high amid speculation over a possible deal.

Fosun said the transaction was expected to close in the first quarter of 2018.

The move will make Fosun the second largest shareholder of the country's largest beer manufacturer.

Guo Guangchang, chairman of Fosun International, said Tsingtao's brand value and market share can be further enhanced in its pursuit to better serve customers by leveraging the consumption upgrade in the brewery market.

Guo said Fosun, as shareholder and strategic partner of Tsingtao, will boost the country's oldest beer brand with Fosun's resources in sports, entertainment, hotels, catering and real estate.

Tsingtao's medium and high-end position in the beer market is in line with Fosun's investment strategy to meet consumption demand for middle class families in China.

The decision to divest its stake in Tsingtao, which Asahi acquired in 2009 for around $666 million, follows the Japanese company's announcement in June it would sell its 20 percent stake in China's Tingyi-Asahi Beverages Holding Co Ltd for $612 million.

China is the world's largest beer market by sales. According to Kantar Worldpanel China, Tsingtao Beer had the biggest market share of 29.3 percent last year.

Tsingtao will have to accelerate premiumization of its product portfolio through bolder innovations and potential international acquisitions, said Jason Yu, general manager of Kantar Worldpanel.