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Heineken-Distell deal stitched up!

European brewer Heineken will buy SA’s largest alcohol producer, Distell, maker of Savanna and Hunters Dry, for R180 a share, the company announced today.

This values Distell, a Stellenbosch-based wine and sprits company, at R40.1bn.

The merger, first proposed in May, will join the world’s largest cider manufacturer, Heineken, with Distell, the second largest.

This is the second buyout of an SA alcohol company after the world’s largest brewer, Ab InBev, bought SABMiller in 2016 for $122bn.

The Distell takeover forms part of a larger transaction that sees Heineken having entered into an agreement with Distell, Namibia Breweries Limited (NBL) and Ohlthaver & List Group of Companies (O&L) with the intention to merge their respective businesses in southern Africa into one large southern African drinks group worth €4bn ($4.6bn).

The merger, which still requires competition authority approval, will open doors in Africa for Heineken. 

Distell has had recent success on the continent, especially in Kenya, where Hunter’s Cider is growing in popularity as more women drink alcohol. The producer has been growing revenue in Mozambique and Nigeria. 

Beermakers continue to add higher-end premium products and a diverse range of drinks to their product portfolios. Heineken competitor Ab InBev has a “beyond beer” strategy, adding alcoholic-flavoured waters and flavoured drinks to its portfolio to keep it competitive. 

Investment bank HSBC, in a note in August, reported that Heineken, maker of Strongbow Cider, had been losing market share to Distell in the premium segment of the market. 

Distell makes a wide range of brands, including Klipdrift brandy, JC Le Roux, Three Ships and Bain’s whisky as well as Nederburg, Durbanville Hills and 4th Street wines.

The Public Investment Corporation (PIC) owns just more than a third of Distell and holds 20.4% of the voting rights.

Concerns and speculation had been mounting due to the length of the negotiations that were initially expected to be completed at end-September.

Remgro, the holding company, trades at a significant discount to the value of its assets, which include Mediclinic International and tech company Community Investment Ventures Holdings, which houses Vumatel fibre-optic operations. The Distell sale is seen as a means of unlocking value for Remgro. 

The sale will see Distell delist from the JSE, adding to a growing number of companies leaving the local bourse. 


Another take on the deal from

Heineken has come good on its pre-announced plan to acquire control of Distell, confirming the EUR2.2bn (US$2.52bn) purchase of a 65% stake.

Six months after opening negotiations, the brewing giant announced an agreement with Distell to fold its operations into Heineken’s existing operations in the continent. At the same time, the group will also acquire Namibia Breweries, and thereby taking full control of ‘Heineken South Africa’ – Namibia Breweries has a 25% interest in the division.

The transactions, both of which require shareholder approval, “will create a Southern Africa champion and an important gateway to Africa, the next frontier of growth”, Heineken said today.

Altogether, the Netherlands-headquartered company will spend EUR2.5bn on solidifying its number two position in South Africa as well as “strengthening and optimising its footprint across Southern Africa”.

“We are very excited to … create a regional beverage champion, perfectly positioned to capture significant growth opportunities in Southern Africa,” said Heineken CEO Dolf van den Brink.

“Today’s announcement is a vote of confidence in the long-term prospects of South Africa and Namibia and we commit to being a strong partner for growth and to make a positive impact in the communities in which we operate.”

Distell CEO Richard Rushton added: “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.

“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.”

Today’s news sets up Africa as a fascinating battleground in alcohol.

Anheuser-Busch InBev cited the region as the primary reason for its takeover of SABMiller five years ago, while Diageo, which was Heineken’s partner with Namibian Breweries until late-2015, has long been working to drive the growth of spirits among Africa’s burgeoning middle-class consumers.