Moutai and Uni-President consider China acquisition

China's top traditional spirit maker, Kweichow Moutai, is approaching a bankrupt domestic rival in a potential acquisition deal that could be worth US$25 million, a wine association official said Thursday.

Moutai and Taiwan's Uni-President are among potential bidders for Ruyang Dukang Group Co., based in central Henan province, and are conducting feasibility studies, Xiong Yuliang, head of the Henan Wine Association, said by telephone.

Dukang, burdened with 4,000 workers, will be auctioned by a local court with a starting price tag of about 180 million yuan (US$25 million), Xiong said, denying an earlier report by China Business News that Moutai had signed an agreement with the bankrupt wine maker.

An investor relations official at Moutai said he was not aware of the matter. Uni-President and Dukang could not be immediately reached for comments.

Moutai, maker of China's most prestigious spirit brand used by Chinese leaders to toast visiting dignitaries, including Richard Nixon and Margaret Thatcher, has been expanding capacity to meet rising demand from increasingly wealthier Chinese consumers. Dukang is also one of China's oldest spirit brands.

China's traditional spirit, or "Baijiu" industry, has in recent years also attracted interest from foreign companies, which account for less than 2 percent of total liquor sales in the country.

Diageo Plc., the world's biggest alcoholic drinks group, Pernod Richard and LVMH, maker of Hennessy, have all bought stakes in Chinese traditional spirit companies.