Heineken set to acquire South Africa's Distell and Namibian Breweries
Dutch brewer Heineken has announced that it has entered into an implementation agreement with Distell Group Holdings Limited, Namibia Breweries Limited, NBL, and Ohlthaver & List Group of Companies, O&L, to integrate their respective and relevant businesses in Southern Africa into one enlarged company.
The Transaction will be implemented through a number of simultaneous and inter-conditional steps, and will involve:
A recommended offer by Heineken for Distell, which values the businesses 1] to be acquired at approximately €2.2 billion and is subject to, inter alia, Distell shareholder approval;
The proposed acquisition from NBL of its 25% shareholding in Heineken South Africa (‘HSA'), which values the whole of HSA at approximately €1.5 billion, and is subject to, inter alia, NBL shareholder approval; and
The acquisition of O&L’s 50.01% interest in NBL Investment Holdings (Proprietary) Limited (‘NBLIH’), the controlling shareholder with a 59.4% shareholding in NBL. Heineken already owns a 49.99% interest in NBLIH. NBL’s current market valuation is approximately €400 million.
At completion, Heineken will contribute these acquired assets plus its 75% directly owned shareholding in HSA and certain other fully owned export operations in Africa, into an unlisted public holding company (referred to as Newco). Heineken will own a minimum of 65% of Newco, with the remainder held by Distell shareholders who elect to reinvest.
“ 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. With NBL, there are exciting opportunities to expand premium beer and cider in Namibia and grow the iconic Windhoek brand beyond its home market. Together we will be able to better serve our consumers and customers through a unique combination of multi-category leading brands and a strengthened route-to-market. The businesses share common values derived from their family heritage, long-term perspectives, entrepreneurial spirit, and care for people and planet.
“We have successfully built our business in Africa over 100 years. 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,” said Dolf Van Den Brink, Chairman of the Executive board and CEO of Heineken.
“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. Our combined entity will grow our local expertise and insights to better serve consumers across the region,” added Richard Rushton, the Distell CEO.
“What we have achieved with NBL is truly amazing, but the time has come to unleash its full potential, by giving NBL access to the world. Having worked with Heineken for many years and knowing that they too are passionate about beer and share similar family values and culture to that of O&L, we are confident that HEINEKEN is best placed to do just that,” said Sven Thieme, NBL CEO.
Strategic rationale
Heineken’s global EverGreen strategy places consumers and customers at its core whilst continually enhancing and expanding its portfolio and footprint. The Transaction will create a Southern Africa champion and an important gateway to Africa, the next frontier of growth, and will:
Strengthen its second position in South Africa, the largest market in Africa, with a unique multi-category portfolio
Bring together the leading portfolios in premium beer, cider, flavoured alcoholic beverages (FABs), wine, and #2 in spirits, with iconic brands such as Heineken®, Savanna, Hunters, 4th Street wine, and Amarula
Beer to benefit from increased scale and continued premiumisation
Acquire the leading Cider & FAB portfolio
Wine and spirits offering complementarity and optionality
Combine two highly complementary route-to-markets, reaching more consumers and customers, more often.
Acquire control of the beer market leader in Namibia, providing premiumisation and other growth opportunities whilst benefitting from cost efficiencies when becoming part of the Heineken group.
Strengthen and optimise its footprint across Southern Africa to accelerate growth:
Combine route-to-markets and portfolios in export countries, to increase efficiency and capture additional growth, especially in attractive markets like Kenya and Tanzania;
Explore wider opportunities to grow the acquired cider and beer brands, such as Savanna and Windhoek, outside their home markets.
Heineken anticipates that the Transaction will generate significant synergies, in line with comparable in-market transactions.
