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Heineken to buy majority stake in Distell

Brewing giant Heineken has agreed to buy a 65% stake in South African drinks group Distell for €2.2 billion (US$2.5bn), excluding the Scotch whisky business.

Heineken will own Amarula liqueur through the purchase of a majority stake in Distell

Dutch firm Heineken and Amarula liqueur owner Distell first entered into discussions over a potential takeover deal in May 2021.

If approved, the transaction will include an internal restructure of Distell to create two new businesses: Newco and Capevin.

Newco will combine Distell’s portfolio of spirits, wine, cider and ready-to-drink beverages with Heineken’s Southern Africa and export markets business, which includes Namibia Breweries.

Distell’s spirits portfolio includes South African whisky brands Bains and Three Ships, Cruz vodka and Klipdrift brandy.

Capevin will include the company’s remaining assets, including its Scotch whisky business, consisting of the Bunnahabhain, Deanston and Tobermory brands.

As part of the agreement, Heineken will own a minimum 65% stake in Newco, while Distell’s largest shareholder Remgro will retain control of Capevin.

Distell said this would create a ‘world class, unlisted, Southern African-focused, alcoholic beverages entity with a leading international beer and cider portfolio’. Furthermore, the combined business will have a ‘significant presence’ in nearby African markets.

‘Formidable’ beverage company

Richard Rushton, CEO of Distell, called the deal a ‘major milestone’.

He continued: “The offer is testament to the strength of Distell’s leading position in South Africa and growth in select African markets, alongside the value of our brands and people providing the potential to immediately unlock significant value for our shareholders.

“Together, this partnership has the potential to leverage the strength of Heineken’s global footprint with our leading brands to create a formidable, diverse beverage company for Africa.

“We will have a stronger route to market with a unique multi-category portfolio, furthering our sustainable growth trajectory and ability to compete on scale.

“I am excited for what lies ahead as we look to combine our strong and popular brands and highly complementary geographical footprints to create a world class African company in the alcohol beverage sector.

“Our combined entity will grow our local expertise and insights to better serve consumers across the region. Heineken and Distell collectively have family-owned values with strong legacies in South Africa and are committed to continuing to play a strong role in addressing critical social and economic imperatives in the country.”

Newco will also be involved in projects and partnerships that have an impact on behavioural change and reduce alcohol-related harm, along with investment in responsible drinking campaigns.

Heineken’s CEO and chairman of the executive board, Dolf van den Brink, added: “We are very excited to bring together three strong businesses to create a regional beverage champion, perfectly positioned to capture significant growth opportunities in Southern Africa. Distell is a highly regarded, resilient business with leading brands, a talented workforce and a strong track record of innovation and growth in Africa.”

The deal is subject to regulatory clearance and shareholder approval.

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