China: SABMiller reported to be considering a bid for Kingway Brewery

SABMiller PLC is to join a growing list of bidders for the brewery operations of Hong Kong beer maker Kingway Brewery Holdings Ltd., which has begun a strategic review and is expected to sell its Kingway brand and brewery assets for roughly HKD4.28 billion ($550 million), Down Jones cited on February, 23 a person familiar with the matter.

London-based SABMiller, the world's second-largest drinks company by volume, which owns brands including Grolsch and Miller Lite, has been stepping up investment in economies including China, Latin America and Eastern Europe to offset sluggish growth in Western Europe and the U.S.

Kingway, which makes the Kingway beer, has set a deadline of the third week of February for expressions of interest, following which a period of due diligence lasting six to eight weeks is expected to begin, people familiar with the matter previously told Dow Jones Newswires.

Kingway beer is popular in Guangdong province, which borders Hong Kong, and is one of the wealthiest provinces in China. Kingway is estimated to be the third-largest player in Guangdong province with approximately 15% market share, according to a Feb. 3 Piper Jaffray report.

Other bidders for the assets include drinks giant Anheuser-Busch InBev NV and two Hong Kong-listed brewers - Tsingtao Brewery Co., maker of Tsingtao Beer; and China Resources Enterprise Ltd., whose beer brands include Snow - the people said. AB InBev, whose flagship brand is the Budweiser beer, already has a stake in Harbin Brewery, which is focused on the north-eastern part of China.

SABMiller already operates a joint venture in China with China Resources Enterprise Ltd.

On Jan. 20, Kingway said that it has established a committee to conduct a strategic review of the company, in particular to look at ways to improve profitability and create new income streams. As part of that process, Kingway said it would invite third-party entities to submit proposals and indicative offers for some of its brewery businesses and assets.

Kingway's controlling stakeholder, GDH Ltd., a unit of state-backed Guangdong Holdings Ltd., has said it wants to keep its 21.37% stake in Kingway. It acquired the stake from a Heineken NV joint venture in China, blocking a bid from China Resources.

China is the world's biggest beer consumer, according to data Kirin Holdings published in 2011. Beer consumption in China in 2010 grew by nearly 6%, twice the global growth rate, according to that data.

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