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Distell shareholders approve Heineken takeover, even as Ninety One sounds alarm

Ninety One opposed the deal on behalf of its investors. Bruce Whitfield interviewed company investment specialist Rob Forsyth.

A majority of Distell’s shareholders have voted in favour of Dutch brewer Heineken acquiring the drinks company (Klipdrift, Savanna, Hunters Dry…).

Heineken announced its offer to buy the South African company for R38.5-billion in November 2021.

The approval came at a Distell extraordinary general meeting on Tuesday 15 February, where 94% of shareholders reportedly supported the offer of R180 a share.

However, it’s emerged that 90% were actually in favour says Rob Forsyth, investment specialist at Ninety One.

Ahead of the meeting, the asset manager voiced strong criticism and said it would be voting against the scheme on behalf of its investors.

Visual representation of Distell-Heineken deal from Distell website

“Heineken plans to unceremoniously snaffle this [JSE-listed] asset and seize the majority of this high-quality liquid investment opportunity,” wrote Ninety One’s Rob Forsyth.

Long-standing shareholders have a fair bit of experience losing beverage assets from the JSE… Think Cadbury Schweppes, Suncrush, ABI and then SABMiller to ABInBev. At least in the latter transaction, shareholders had the option of remaining invested in a listed entity. We have not been given this option with Distell.

Rob Forsyth, Investment Specialist – Ninety One

Bruce Whitfield interviewed the Ninety One investment specialist on The Money Show.

The bottom line is, we think Distell is a fantastic asset… just managing to hit its stride at the moment… It’s taken a lot of market share in the alcoholic beverage market in South Africa… It’s performance was fantastic during the Covid period despite regulatory lockdown.

Rob Forsyth, Investment Specialist – Ninety One

… and we would be very happy to hold the share on behalf of our investors at R180 a share! We don’t think we’re being recompensed in any way whatsoever through the privilege of this deal…

Rob Forsyth, Investment Specialist – Ninety One

Why then would controlling shareholder Remgro be happy with the Heineken scheme? asked Whitfield.

Our summation of it would be that obviously Remgro has a great ability to be a long-term shareholder in an ‘inequite’ structure, so they are going to benefit as well with Heineken from significant cost savings… and they protected their rights through some complicated shareholder agreement regarding what the entity can and cannot do…

Rob Forsyth, Investment Specialist – Ninety One

Heineken clearly has a growth strategy for this business and want to use it as a jump-off point for the rest of the African continent, because what Distell does have is distribution arrangements across our continent?

Bruce Whitfield, The Money Show host

You put the two companies together and they’re going to benefit from distribution synergies, head office synergies as well as a more diverse portfolio with lots of growth opportunities.

Rob Forsyth, Investment Specialist – Ninety One

Listen to the discussion on The Money Show:

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