Carlsberg share price: Brewer eyes acquisitions in Asia

on Nov 11, 2013
Updated: Oct 21, 2019
Listen, Monday, November 11: Danish brewer Carlsberg A/S (CPH:CARL-B) is seeking to expand in Asia and is exploring acquisition opportunities in the continent’s fast growing markets. The company has been looking at several takeover targets, including China’s Tsingtao Brewery (HKG:0168) and Beijing Yanjing Brewery (SHE:000729), which produce some of the most popular brands in the world’s biggest beer market, Bloomberg reported, quoting sources. The Philippines’ San Miguel Brewery, in which a 51 percent stake has been put up for sale, is also said to be considered by Carlsberg. The Newswire has estimated that the world’s top three brewers – Anheuser-Busch InBev, SABMiller and Heineken – have taken part in deals worth a total of almost $110 billion in the last five years, while Carlsberg, the number four, has largely refrained from acquisitions with deals valued at a meagre $1.2 billion during the same period. It has therefore lagged behind rivals, with a revenue of DKK 67 billion (£7.5 billion) last year – about half of the turnover of Heineken, its closest competitor. In its latest big deal, Carlsberg joined forces with Heineken to buy British brewer Scottish & Newcastle for a total of about $15 billion in early 2008.

**Preparing for growth**
Last month, Carlsberg’s main owner, the Carlsberg Foundation, said it would abandon a rule in its charter that obliges it to own at least 25 percent of the brewer. The change was designed to give the company more financial flexibility to act if acquisition opportunities emerged, but Chairman Flemming Besenbacher has stressed that there are no immediate plans of any structural changes or rights issues. About a week after that announcement, the China Securities Regulatory Commission (CSRC) gave Carlsberg the green light to boost its stake in Chongqing Brewery to 60 percent from the current 29.7 percent in a DKK 2.65 billion deal. Carlsberg owns stakes in eight brewing groups that run some 40 breweries in China, according to data on its website. It has become the leading brewer in West China, claiming a 55 to 60 percent market share in the region, but with respect to the the whole country, its share stands at around seven percent. China is important as it is the world’s largest beer market in terms of production and consumption – around 33% higher than number two, the US.

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**Asian market**
Several analysts that have been approached by Bloomberg said that the Danish brewer needs and wants to grow and catch up with larger rivals and Asia would be a preferred place for expansion. In 2012, Asia accounted for 21% of total volume and 15% of Carlsberg’s operating profit. In the first half of this year, the brewer experienced a seven percent year-on-year organic growth in beer volumes in Asia, compared with a three percent growth in Eastern Europe and a five percent drop in Western Europe.

However, analysts warned that there is a risk of overpaying as the robust growth in the Asian beer market pushes up valuations of local brewers. Tsingtao share price surged to an all-time high last month, while Yanjing’s stock climbed to the highest in more than a year.

Carlsberg share price opened about one percent higher in Copenhagen today, but lost some ground and traded at DKK 548 as of 12:54 UTC, down 0.27 percent from Friday’s close. The stock is little changed this year.
**As of 12:54 UTC, buy Carlsberg shares at DKK 548.50.**
**As of 12:54 UTC, sell Carlsberg shares at DKK 548.00.**
Trade these shares now through Hargreaves Lansdown from £5.95 per deal.
Prices can go up and down meaning you can get back less than you invest. This is not advice. Dealing services provided by Hargreaves Lansdown.


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