State-owned GDH will buy a 21.39% stake in its subsidiary Kingway Brewery Holdings (0124.HK) from Heineken (HEIA.Euronext) and Asia Pacific Breweries (A46.SGX), the Wall Street Journal reported. China Resources Enterprise (CRE; 0291.HK) – maker of Snow, China’s top-selling beer, through a joint venture with SABMiller (SAB.LSE, SAB.JSE) – had agreed terms with Heineken-APB (China). However GDH, which already owns 52.5% of Kingway, decided to exercise its pre-emptive right to purchase the stake, valued at US$164.7 million. It isn’t clear whether GDH, the investment arm of the Guangdong provincial government, will have to make a general offer for all Kingway shares it doesn’t already own, as per Hong Kong Stock Exchange regulations. CRE’s failure is unlikely to slow an acquisition drive that has seen it buy stakes in small breweries all over China. The company owned more than 70 breweries with an annual production capacity of more than 14.5 billion liters, or 3.8 billion gallons at the end of 2010.