Acquisition of 21% Stake in Guangdong Brewery Holdings Limited

Pursuant to clause 704(15)(a) and (c) of the Listing Manual, Fraser and Neave, Limited announces that its subsidiary, Heineken Asia Pacific Breweries (China) Pte Ltd ("HAPBC"), which is held 50-50 through Asia Pacific Breweries Limited ("APB") and Asia Pacific Investment Pte Ltd, has today entered into conditional agreements to acquire a 21 percent interest in Guangdong Brewery Holdings Limited ("Guangdong Brewery"). Guangdong Brewery is a corporation organized and existing in Bermuda, the shares of which are listed on the Hong Kong Stock Exchange. Conditions include securing necessary approvals of shareholders of Guangdong Brewery.

HAPBC's acquisition of approximately 300 million shares of HK$0.10 each in the issued capital of Guangdong Brewery, comprises a combination of 165.5 million (comprising 11.67 percent of the enlarged capital) existing shares from GDH Limited ("GDH"), which is the majority shareholder of Guangdong Brewery, and 133.8 million (comprising 9.33 percent of the enlarged capital) new shares by way of subscription in the issued share capital of Guangdong Brewery at HK$1.85 per share for both existing and new shares.

The aggregate value of the consideration is HK$557.3 million (approximately S$121.3 million), which was arrived at on a willing buyer-willing seller basis, taking into consideration the market price of Guangdong Brewery shares at the time, and its earnings. The acquisition will be funded from the Group's internal cash resources and the consideration will be satisfied in cash upon completion.

No independent valuation of Guangdong Brewery assets was conducted. It is a listed company on the Hong Kong Stock Exchange. Guandong Brewery shares have traded in the range of HK$1.19 to HK$2.20 for the six-month period preceding the announcement. On 27 January 2004, Guangdong Brewery shares closed at HK$2.05.

The acquisition is not expected to have a material effect on the net tangible assets per share or earnings per share of the Company for the current financial year.

None of the directors or substantial shareholders of the Company has any interest, direct or indirect in the acquisition.

A copy of the press release issued by APB today, is attached for information.

APB EXTENDS PRESENCE IN CHINA MARKET

Hong Kong, 28 January 2004 - Three weeks ago, Asia Pacific Breweries Limited (APB) announced intentions to finalise arrangements (subject to shareholders' approval) to combine its operations in China with its substantial shareholders, Heineken and Fraser and Neave, Limited (F&N) and to produce and market Heineken lager in the People's Republic of China (excluding Hong Kong and Macau). Today, Asia Pacific Breweries Limited (APB) further strengthens its strategy for the PRC market by entering into agreements to acquire about 21% stake in one of the most profitable breweries in China, through its associated company, Heineken Asia Pacific Breweries (China) Pte Ltd (Heineken APB).

Heineken APB has entered into agreements to acquire a total of 21% stake in Guangdong Brewery Holdings Limited (Guangdong Brewery). Heineken APB will acquire a combination of 133.768 million new shares in Guangdong Brewery and 165.496 million existing shares from GDH Limited at the price of HK$1.85 per share. GDH Limited is the majority shareholder of Guangdong Brewery.

The total acquisition is valued at US$71.3 million, of which APB's 50% share is US$35.7 million; the remaining amount will be borne by Asia Pacific Investment Pte Ltd, the other 50% shareholder of Heineken APB and parent company of APB which is a 50-50 joint venture between Heineken and F&N.

Guangdong Brewery is an investment holding company whose subsidiaries produce, distribute and market Kingway beer. It is a leading regional brewer in the Guangdong Province and its major markets include Shenzhen, Dongguan, Pearl River Delta and East Guangdong.

In Guangdong, Guangdong Brewery is the third largest brewery in terms of sales volume with a dominant position in Shenzhen and Dongguan. It is also one of the most profitable listed breweries with operations in China.

Guangdong Brewery owns two plants in Shenzhen. The first plant was constructed in 1986 and its capacity was expanded to 2 million hectolitres in 1996. A second 2 million hectolitre plant was built in a new industrial zone in the suburbs. In July 2003, Guangdong Brewery announced that it had plans to set up a third plant with an expected capacity of 2 million hectolitres in Shantou, Guangdong province. They expect operations to commence in 2005.

Guangdong Brewery is listed on the Hong Kong Stock Exchange. It is 72% owned by GDH Limited. GDH Limited is the investment vehicle of the Guangdong government.

Commenting on the acquisition, Mr Koh Poh Tiong, Chief Executive Officer, APB and Chairman, Heineken APB said, "The intention is for all of APB's business operations in China to be streamlined under Heineken APB. Pending APB's shareholder approval, Heineken APB will be awarded the licence to commence producing and marketing Heineken lager in the PRC and targets to brew the world-renowned Lager at its breweries later this year."

"This partnership with Guangdong Brewery is another step in the crystallisation of our strategy for the China beer market. Its excellent equipment has the potential to brew Heineken lager as well. Heineken APB will work together with Guangdong Brewery to maximize commercial opportunities for the Heineken brand in combination with the strong Kingway brand," he continued.

China has the largest beer market in the world with an estimated sales volume of 250 million hectolitres of beer in 2003. The Guangdong market is one of the key provinces that have been identified in APB's strategy for China. With a population of 85 million people, it is one of the largest and wealthiest provincial beer markets in China with an estimated volume of 18 million hectolitres per year.

"The partnership with Guangdong Brewery, one of the largest and most profitable brewers in China, will further strengthen the position of Heineken APB considerably. Guangdong Brewery's main brand is Kingway beer which is not only available in the Guangdong province but also in Hong Kong, Macau and Taiwan. Under the leadership of Chairman Ye Xu Quan, the company has made tremendous growth and delivered sterling performances in recent years," observed Mr Koh.

Upon completion of the acquisition of the strategic stake in Guangdong Brewery subject to shareholder approval by the Guangdong Brewery shareholders, it will be APB's third brewery interest in China. Its existing two breweries are located in Shanghai and Haikou.

"APB will have a 3-pronged growth strategy in place. Firstly, concentrating all our business operations under the Heineken APB umbrella allows us to focus on the China market and make further inroads into the world's biggest beer market. Secondly, the licence to brew Heineken lager in the PRC gives us access to produce and market one of the world's most famous lagers in this market thereby enhancing our existing volumes and improving the profitability of our China operations. Thirdly, we have established an alliance with one of the leading breweries in the fast-consolidating China beer market ," said Mr Koh.

Submitted by Anthony Cheong Fook Seng, Group Company Secretary on 28/1/2004 to the SGX