Lion pulls out of China JV talks

By Phil Boeyen, ShareChat Business News Editor

Tuesday 3rd July 2001

Lion Nathan (NZSE: LNN) has terminated discussions with two of China's largest brewers after failing to progress any possible co-operative arrangements.

The Australian-based brewer says it has been looking to participate in the consolidation of the Chinese beer market over the past twelve months, however CEO Gordon Cairns says talks with other brewers have been ended.

"Having patiently negotiated in good faith with a number of major brewers, we have now reached a point where we do not believe that a sensible outcome can be achieved in the foreseeable future.

"As a result, we have advised these two parties that we do not believe their proposals are realistic options for Lion Nathan and its shareholders. While this is disappointing, we are keen to bring an end to the uncertainty, which is not helpful from an operating perspective."

Mr Cairns says despite the outcome the company is encouraged by recent improvements in the operating performance of China.

He says as well as the reduced losses announced at the company's half-year, there is evidence of improving demand in the Chinese beer market.

Last year Lion Nathan took a $120 million charge on its unprofitable brewing business in China, dropping its net profit after tax to just $A3.7 million.

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