Heineken has announced plans to buy South Africa's Distell Group Holdings and Namibia Breweries Ltd to form a southern Africa drinks group worth €4 billion.
The purchase of Distell would mark a push into wine and spirits for the world's second-largest brewer, with liqueur brand Amarula and wines including well-known labels such as Nederburg.
The Dutch brewer will pay about 40.1 billion rand (€2.3 billion) for Distell, which said this valued its entire business at 180 rand per share, a discount of 1.4% to the stock's Friday close.
Heineken will also take control of regional partner Namibian Breweries Ltd (NBL), whose current market valuation is about €400 million.
Heineken will buy the 50.01% interest of Ohlthaver & List Group of Companies in NBL Investment Holdings, which holds 59.4% of Namibia Breweries (NBL). Heineken holds the remaining 49.99% of the holding vehicle.
The transaction also entails Heineken's purchase of NBL's 25% shareholding in Heineken South Africa, valuing the whole of the latter at €1.5 billion.
Distell's deal talks with Heineken, the world's second largest beer maker, were first announced in May.
Distell shares, which shot up then, were trading down 7.1% at 169.61 rand, while Heineken's were up 1.0% at €98.20 at 08:30 GMT.
Heineken and Distell, the world's largest and second-largest cider makers respectively, have gone head-to-head for the cider market in South Africa since Heineken launched its Strongbow brand there in 2016.
The purchase would be the first for Dolf van den Brink, who took charge at Heineken in June 2020 and has launched a plan to restore profit margins, partly through cutting 8,000 jobs.
Distell did not pay a dividend for the financial year ended 30 June, as a condition for Heineken's takeover proposal. Its group CEO, Richard Rushton, said the deal was likely to close by the end of December 2022 and as part of the agreement, shareholders would not be paid any interim or full-year dividend.
In August, Distell reported a more than three-fold rise in its headline earnings per share, the main profit measure in South Africa, as the company recovered from a lengthy coronavirus-related ban on alcohol sales in its home market.
Synergies In Production
Dutch brewer Heineken sees synergies in production, logistics and procurement from buying South Africa's Distell Group Holdings and Namibia Breweries Ltd but does not see them coming from job losses, its chief executive said.
"There's good cost synergies, not really employment-driven. We will also be engaging with the minister of trade on making commitments in that regard, but I don't expect any job losses in the near term," Dolf van den Brink told Reuters.
Hw also said revenue synergies would be "significant", adding: "I think typically that's code language for at least 10% of revenue or over, which I think is what we have typically been able to promise and deliver in similar deals in the recent past."