Carlsberg A/S, the Danish beer-maker, is weighing the purchase of a 20 percent stake in China's Tsingtao Brewery Co., people familiar with the matter said.

The Copenhagen-based company is working with an adviser on a potential bid for the Tsingtao stake being sold by Asahi Group Holdings Ltd., said the people, who asked not to be identified because the information is private. No final decision has been made, according to the people. The shares are worth about $1.2 billion based on Wednesday's close in Hong Kong, data compiled by Bloomberg show.

Tying up with Carlsberg could help Tsingtao as it grapples with competition from China Resources Beer Holdings Co.'s best-selling Snow lager and Anheuser-Busch InBev NV's Budweiser label. Carlsberg already owns about 60 percent of rival Chinese beer-maker Chongqing Brewery Co., in addition to selling its own brands in the country including Tuborg, Kronenbourg 1664 Blanc and its namesake pilsner.

"Tsingtao is fighting a battle on multiple fronts and they're overwhelmed," Jeremy Yeo, a Hong Kong-based analyst at Mizuho Securities Asia Ltd., said by phone Thursday. "The Carlsberg interest represents the best chance Tsingtao has had in 10 years."

Asahi, Japan's largest brewer, is exploring a potential sale of its minority Tsingtao holding, people with knowledge of the matter said last month.

Asahi President Akiyoshi Koji said in a January interview the company will decide this year on options for its Tsingtao stake, as "ownership without control doesn't make much sense."