HONG KONG (Dow Jones)--Bids for the brewery operations of beer maker Kingway Brewery Holdings Ltd.(0124.HK) are due by the third week of February, with several parties, including Anheuser-Busch InBev NV having expressed interest in the Guangdong province-focused assets, people familiar with the situation said Friday.

Once bids are in, there will be a six- to eight-week due diligence period, one of the people said.

Kingway said in late January it was inviting bidders as part of a strategic review.

One person said Kingway, which had a market capitalization of HK$4.28 billion (US$550 million) as of Friday, plans to sell the Kingway brand and brewery assets.

Other bidders for the assets include Hong Kong-listed brewers--Tsingtao Brewery Co. (0168.HK), maker of Tsingtao Beer, and China Resources Enterprise Ltd.(0291.HK), whose beer brands include Snow, the people said. Anheuser-Busch, whose flagship brand is the Budweiser beer, already has a stake in Harbin Brewery, which is focused on the north-eastern part of China.

"This is one of the few independent beer assets available to buyers in China, so there is a wide range of interest," said one person familiar with the deal.

Kingway beer is popular in Guangdong province, which borders Hong Kong, and is one of the wealthiest provinces in China. Kingway is estimated to be the third largest player in Guangdong province with approximately 15% market share, according to a Feb.3 Piper Jaffray report.

AB InBev, Kingway Brewery, and China Resources declined to comment Friday, while Tsingtao Brewery couldn't immediately be reached for comment.

Increasing labor and raw-material costs are likely to put pressure on small breweries, and regional players, prompting loss-makers to find a way of exiting the market either by selling assets or brands, analysts have said. They added this is likely to be a year wit a lot of consolidation.

China Resources Snow Breweries Ltd., a joint-venture between China Resources and SABMiller PLC, has been actively acquiring smaller brewers recently. CR Snow in August acquired the stakes it didn't already own in both Hangzhou Xihu Beer and Huzhou Brewery in Zhejiang province for CNY 300 million.

Foreign brands, too, are keen on China. In 2004, London-based SABMiller, the brewer of the Miller brand, battled rival Anheuser-Busch for China's Harbin Brewery Group Ltd. Anheuser-Busch eventually won.

On Jan. 20, Kingway said in an announcement that it has established a committee to conduct a strategic review of the company, in particular to look at ways to improve profitability and create new income streams. As part of that process, Kingway said it would invite third-party entities to submit proposals and indicative offers for some of its brewery businesses and assets.

Kingway reported that half-year revenue rose 14% to HK$892 million, while earnings were down 84% to HK$1.5 million as costs rose.

The Kingway assets could widen the acquiring party's distribution network in China and help to lower fixed and input costs, analysts said.

-By Prudence Ho and Nisha Gopalan, Dow Jones Newswires; 852-2802-7002; prudence.ho@dowjones.com

-Mike Esterl contributed to the story.

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