Africa: Heineken to cede 35% stake in regional alcohol distribution business to Distell Group shareholders

Dutch brewer Heineken will cede a 35 percent stake in its regional alcohol distribution business including Kenya to shareholders of Distell Group as part of its acquisition of the South Africa-based firm, the Business Day reported on March 11.

The Heineken distribution businesses in Tanzania, Uganda, Kenya, and South Sudan are valued at R885.5 million (Sh6.6 billion) and will be transferred to a South African subsidiary called Sunside Acquisitions Limited that will be jointly owned by Heineken and Distell.

Heineken, which currently fully owns the regional alcohol distribution businesses, will end up with a diluted but a controlling 65 percent stake in Sunside while Distell will hold the remaining 35 percent.

As part of the transactions, Distell will also bring its interests in its subsidiaries including Kenya Wine Agencies Limited (Kwal) to Sunside.

The parties say the ongoing transaction will result in a stronger operation that will grow and compete more effectively against rivals such as Diageo.

“The transaction will create a world-class, southern-African-focused, alcoholic beverages entity (Newco) with a leading beer and cider portfolio, combining the complementary brands, talent, and skills of Distell, Heineken, and NBL, to better serve consumers across the region,” Distell said.

“Newco will also have a significant presence in adjacent African markets. Newco will benefit from strengthened route-to-market and scale that is expected to unlock revenue and cost synergies, which will improve its ability to grow and compete with the other players in the region.”

Distell’s product portfolio comprises spirits, wines, cider, whisky, and gin. Heineken on the other hand is a specialist in premium beer and cider brands. Diageo has a diverse product range catering to a wide range of incomes, with Guinness among its most popular brands on the continent.

Heineken says the manufacturing and marketing of products imported into Kenya will be co-ordinated from South Africa once the tie-up with Distell is completed.

“In terms of this agreement, Heineken cedes its rights and delegates its obligations under all distribution agreements entered into by HBBV (Heineken Brouwerijen B.V.) in respect of the import, marketing, sale, and distribution of Heineken products in Uganda, Kenya, and South Sudan,” the Dutch multinational said.

Kwal plans to manufacture more wine brands in Kenya, reducing the portfolio of products it has been sourcing from South Africa. The transaction disclosures have revealed significant assets that Kwal owns in Kenya.

A subsidiary, KWAL SEZ Limited, owns three parcels of land in Tatu City measuring a total of 30 acres and which were acquired last year at a cost of Sh1.1 billion.

11 March, 2022