Anheuser-Busch InBev NV and two Chinese brewers are in the race to buy a stake, potentially worth as much as $700 million, in China's Kingway Brewery assets,

Reuters yesterday reported, citing sources with knowledge of the matter.

With a market value of about $655 million, Kingway is looking to sell equity stakes in six breweries, all beer and beer-related trade marks, domestic and overseas distribution networks, but not its two beer plants.

The planned dilution of stake of its assets comes after Kingway conducted a strategic review last month in order to improve to improve profitability and create new income streams.

China Resources Enterprise Ltd, the owner of Snow beer brand, and Beijing Yanjing Brewery Co Ltd are among the other companies that have advanced to the next round, the report said.

It is not clear whether London-based SABMiller, the world's second-largest drinks company by volume, which owns brands including Grolsch and Miller Lite, and Hong Kong-listed Tsingtao Brewery Co have also bid.

Anheuser-Busch, whose flagship brand is the Budweiser beer, already has a stake in Harbin Brewery, while SABMiller has a joint venture with China Resources called China Resources Snow Breweries Ltd.

Anheuser-Busch has two breweries in China and was the country's third-largest brewer in 2010, with a market share of 11.4 per cent.

Hong Kong-based Kingway, a subsidiary of state-owned Guangdong Holdings Group, the biggest Hong Kong-based enterprise owned by the Guangdong state, is China's leading beer maker.

Dutch brewer Heineken International holds a 21 per cent stake in Kingway.

It produces, distributes and markets beer in more than 20 provinces under "Kingway", "Kingway Draft" and "Super Fresh Kingway" brand.

Kingway is said to be the third largest beer company in Guangdong province with approximately 15 per cent market share, according to a Piper Jaffray report.

It has eight beer production plants with an annual production capacity of 1.7 million tonnes.

With Chinese beer guzzlers consuming 11.9 billion gallons of beer in 2010 - almost twice as much as the US, China's beer market is expected to grow 5 per cent annually, twice as fast as the rest of the global market, according to analysts.