BREWER Scottish & Newcastle cleared a major hurdle in the way of it gaining a foothold in the Chinese beer market.
The group has signed a legal agreement to purchase a 19.5 per cent stake in a subsidiary of Chongqing Breweries (CBG), the sixth biggest brewer in China.
The £35m deal hinges on approval from the Chinese government and that is expected to come within the next few months.
CBG operates 18 breweries, mainly in the south-west of China, and has a ten-year-old agreement to brew and supply McEwan's lager to the Chinese market on behalf of Scottish & Newcastle.
The region is one of the most densely populated in the country and Chongqing is China's largest city, with more than 30 million people.
Proceeds from the deal will be used to fund CBG's fast-paced acquisition and expansion programme in neighbouring provinces in China.
Overseas brewers are scrambling for a slice of the Chinese market, which is growing at a compound rate of five per cent each year.
Budweiser owner Anheuser-Busch has headed off rival SABMiller in the race for the Harbin Brewery Group.
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