(Bloomberg) -- China Resources Beer Holdings Co. plans to raise HK$9.5 billion ($1.2 billion) in a Hong Kong share sale to help finance the purchase of the remaining stake in a Chinese venture with SABMiller Plc, consolidating its lead in the world's largest beer market by volume. The shares fell in Hong Kong trading.
The maker of the world's best-selling Snow brand beer will issue about 811 million rights shares at HK$11.73 apiece, it said in a statement Wednesday. That's 25 percent less than the theoretical ex-rights price, which takes dilution into account, according to the statement. The stock fell as much as 4.4 percent, the biggest intraday decline since Feb. 26, to HK$16.20, before trading at HK$16.40 as of 11:07 a.m. in Hong Kong.
China Resources Beer agreed in March to buy out its venture with SABMiller for $1.6 billion, smoothing the way for a takeover of its partner by Anheuser-Busch InBev NV. China's beer market is one of the most competitive, with major brewers including Tsingtao Brewery Co., Beijing Yanjing Brewery Co., Anheuser-Busch InBev NV, and a myriad of smaller, regional producers.
The partnership between SABMiller and China Resources, which began with two breweries in 1994, operates more than 90 operations across China, according to SABMiller's website.
Nomura and UBS Group AG advised China Resources on the venture takeover, along with Rothschild & Co., Citigroup Inc. and HSBC Holdings Plc.
Beer sales in China, the world's largest beer market by volume, are expected to rise 41 percent in the five years through 2019 to reach 683 billion yuan ($102 billion), research firm Euromonitor estimates.
The share sale enlarges China Resources Beer's capital by about 25 percent and the issue will be underwritten by CRH Beer, a unit of China Resources (Holdings) Co. CRH Beer's stake would rise to 63.75 percent following the rights offer, from 51.67 percent, assuming no rights shares are taken up by qualifying shareholders except for CRH Beer.
The company will provisionally allocate one rights share for every three existing shares held by each qualifying shareholder, according to the statement Wednesday.
To contact the reporter on this story: Dave McCombs in Tokyo at dmccombs@bloomberg.net. To contact the editors responsible for this story: K. Oanh Ha at oha3@bloomberg.net, Young-Sam Cho at ycho2@bloomberg.net.
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