SABMiller's offer starts a bidding war in the world's biggest beer market by volume

It is the first major bidding war between foreigners for a Chinese listed company, China's fourth biggest brewer.

SABMiller offered HK$4.31bn, ($553m), for Harbin following Anheuser-Busch's purchase on Sunday of 29% of Harbin's shares for HK$1.08bn ($146m).

Shares in Harbin rose sharply by over 45% to close Wednesday at HK$4.70.

The SABMiller offer values Harbin shares at HK$4.30 each following Anheuser-Busch's offer which came in at HK$3.70 per share.

Stake

SAB already owns 29.4% of Harbin Brewery which it bought last year.

Harbin is one of China's oldest brewers and the sector has been awash with foreign investment from large overseas companies in recent years.

China's beer market is growing by up to 8% a year, and many Western companies are anxious to establish their stake in the world's most populous country.

"It's a large market and increasingly profitable in the long-term," said SABMiller's chief executive Graham Mackay.

Attractive

Overseas firms are eager to buy into the existing market and distribution networks of the Chinese brewers in an economy which has been growing at nearly 10%.

SABMiller has a 49% stake in the Chinese number two brewer, China Resources Breweries, and Anheuser-Busch owns 10% of market leader, Tsingtao.

Heineken, Carlsberg Breweries and Scottish and Newcastle have all made recent investments in Chinese beer makers.

SABMiller came into being in June 2002 when South African Breweries bought US-based Miller for $5.6bn.