THERE is a brewing convergence in the beer market, where Heineken NV is seeking to buy a majority stake in the Savanna cider-maker, Distell Group Holdings Limited.
It is not clear how much stake Heineken is drooling over.
In an announcement yesterday, Distell said it was approached by Heineken NV regarding the potential acquisition of a majority of Distell’s business.
According to a Nasdaq report, Distell is the world’s second-largest cider maker, a business in which Heineken is heavily involved, chiefly through its Strongbow brand.
Distell also makes wines and spirits, including Amarula and Two Oceans wines. Heineken already sells beer in South Africa, and surrounding countries.
Both companies said discussions were ongoing and there was no certainty an agreement would be reached.
On the Namibian Stock Exchange, Namibia Breweries gave caution and highlighted that with its 25% ownership in Heineken South Africa, if approved, such a deal could “affect its business”.
Distell produces Klipdrift brandy, Nederburg wine, Amarula cream liqueur, Savanna cider and Bain’s Cape Mountain Whisky. Remgro Ltd, an investment vehicle of South African billionaire Johann Rupert, and Public Investment Corp, Africa’s biggest pension fund, each hold a little more than 30% of Distell, according to data compiled by Bloomberg.
According to a Bloomberg report, Heineken is emerging from one of the beer sector’s toughest crises.
Despite gains in Vietnam and Mexico, the brewer is still facing setbacks in key markets such as Brazil and the United Kingdom where restrictions on movement and sales have hurt demand. Earlier this year, the company laid off 8 000 employees. The brewer surprised analysts in April with stable first-quarter sales, as emerging markets made up for declines in Europe.
South Africa was one of Heineken’s best-performing markets, which is surprising given the country’s recurring ban on alcohol.
Namibia Breweries’ investment in Heineken South Africa also made a negative return in the recently reported period.
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