Anheuser-Busch InBev NV
The deal value could be as high as $700 million and the short-listed bidders are expected to conduct due-diligence over the next two months, one of the sources said.
China Resources Enterprise Ltd <0291.HK>, which owns Snow beer brand, and Beijing Yanjing Brewery Co Ltd <000729.SZ> are among the other companies that have advanced to the next round, the sources said.
Foreign and Chinese brewers are jostling to grow their market share in China, the world's biggest beer market, and Kingway's planned sale is one of the few sizeable brewery assets that has come up for sale in recent times.
The eventual winner can benefit from strong growth in China's beer consumption. China's beer demand hit 450 million hectoliters in 2010, nearly twice that of the United States, and is expected to grow 5 percent per year in coming years, double the 2.5 percent growth forecast for the global market for 2011.
Kingway, with a market value of about $655 million, has said it does not plan to sell an equity stake in the company. The stock was trading up 2.0 percent on Friday afternoon, outperforming the 1 percent gain of the broader market <.HSI>.
The stock is up about 38 percent so far this year on expectations of strong bidding.
Kingway Brewery has invited bids for equity stakes in six breweries, all beer and beer-related trade marks, domestic and overseas distribution networks, the sources said. The company plans to retain two of its production facilities, one of the sources said.
Anheuser-Busch and China Resources declined comment, while Kingway and Yanjing officials were not immediately available for comment. The sources declined to be identified as the discussions were private.
AB-InBev was the third-biggest brewer in China with a market share of 11.4 percent in volume terms as of 2010, according to data compiler Euromonitor. Its main breweries are in Fujian Sedrin in southeast China, and Harbin in the northeast.
China's largest brewer China Resources Snow is a joint venture between China Resources and SABMiller Plc
SABMiller has said that any deal in China would be through its CR Snow joint venture, in which it own 49 pct with the rest owned by China Resources Enterprise.
AB-Inbev has always stressed it looks to control its own operations in China and analysts say a deal with Kingway would complement its footprint in China.
In April last year, GDH Ltd, a unit of state-backed Guangdong Holdings Ltd, had exercised the right to buy the 21.37 percent stake in Kingway held by a Heineken NV
GDH paid 1.08 billion yuan ($164.94 million) for the stake, increasing its holding to 73.82 percent.
Kingway was previously jointly controlled by Asia Pacific Breweries Ltd (APB)
(Additional reporting by Philip Blenkinsop in LUXEMBOURG, David Jones in LONDON; Editing by Jacqueline Wong and Muralikumar Anantharaman)