ANHEUSER-Busch InBev, the world’s biggest brewer, and two Chinese brewers are on the short list to buy most of the operations being sold by China’s Kingway Brewery Holdings, sources with direct knowledge of the matter have said.

The deal value could be as high as $700m and the short-listed bidders were expected to conduct due-diligence exercises over the next two months, one of the sources said.

China Resources Enterprise, which co-owns the Snow beer brand with SABMiller , and Beijing Yanjing Brewery are among the other companies that have gone to the next round, the sources said.

Foreign and Chinese brewers are jostling to grow their market share in China, the world’s biggest beer market, and Kingway is one of the few sizeable brewery assets that have come up for sale in recent times.

The eventual winner can benefit from strong growth in China’s beer consumption.

China’s beer demand reached 450-million hectolitres in 2010, nearly twice that of the US, and is expected to grow 5% a year in coming years.

Kingway, with a market value of about $655m, has said it does not plan to sell an equity stake in the company. The stock is up about 38% so far this year on expectations of strong bidding.

Kingway Brewery has invited bids for equity stakes in six breweries, all beer and beer-related trademarks, and domestic and overseas distribution networks, the sources said.

It planned to retain two of its production facilities, one of the sources said.

AB-InBev was the third-biggest brewer in China with a market share of 11,4% in volume terms as of 2010, according to data compiler Euromonitor.

China’s largest brewer, China Resources Snow, is a joint venture between China Resources (51%) and SABMiller (49%). SABMiller has said any deal in China would be through the joint venture.

AB-Inbev has always emphasised that it looks to control its own operations in China and analysts say a deal with Kingway would complement its footprint in the country.

In April last year, GDH, a unit of state-backed Guangdong Holdings, exercised the right to buy the 21,37% stake in Kingway held by a Heineken joint venture in China, blocking a bid from China Resources.

Reuters