South African wines, spirits and cider company Distell announced today that it has received a firm offer from Heineken International BV to acquire the entire issued share capital in Distell by way of a scheme of arrangement*. Heineken said that it intends to acquire control of Distell and Namibia Breweries to create a “regional beverage champion” for Southern Africa.
The offer of R180 per share values Distell at a market capitalisation of R40.1 billion (US$2.64 billion), which Distell said recognises the strength of its brands, people, growth prospects and continued resilient performance.
Distell is Africa’s leading producer of spirits, wines, ciders and ready-to-drinks (RTDs) and the world’s second-biggest producer of ciders. The company’s top brands include Amarula, Hunter’s, Savanna, 4th Street, Klipdrift, Nederburg, Richelieu, Viceroy, and J.C. Le Roux.
Distell CEO Richard Rushton said: “Today marks a major milestone in Distell’s journey. Our resilient business’ stand-out performance and the excellence of our people have been recognised by a much-admired global brewer in Heineken.
Key takeouts
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“The offer is testament to the strength of Distell’s leading position in South Africa and growth in select African markets, alongside the value of our brands and people providing the potential to immediately unlock significant value for our shareholders. 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.
“We will have a stronger route-to-market with a unique multi-category portfolio, furthering our sustainable growth trajectory and ability to compete on scale. 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.
“Heineken and Distell collectively have family-owned values with strong legacies in South Africa and are committed to continuing to play a strong role in addressing critical social and economic imperatives in the country.”
Heineken CEO and Chairman of the Executive Board Dolf van den Brink said: “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 Namibia Breweries Limited, 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 multicategory leading brands and a strengthened route-to-market.
“The businesses share common values derived from their family heritage, long-term perspectives, entrepreneurial spirit, and respect for people and the 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.
*The Transaction Summary
If the scheme of arrangement receives all required approvals, and as an initial step, Distell will restructure its operations into two separate businesses, namely a cider, ready-to-drink beverages, and spirits and wine business (“In-Scope Assets”); and a business consisting of Distell’s remaining assets, including its Scotch whisky spirits business (“Out-of-Scope Assets”).
As part of the scheme of arrangement, Distell’s Out-of-Scope Assets will be distributed to Distell shareholders as shares in an unlisted company (“Capevin”) and, further, Heineken and its wholly owned subsidiary Newco will make two simultaneous and inter-conditional offers, namely:
- A cash and share offer from Newco to Distell shareholders for all the shares in Distell (which will, after the restructuring, hold the In Scope Assets, with Distell’s broad-based black economic empowerment partner continuing to hold 15% of the In Scope Assets located in South Africa); and
- A cash offer from Heineken to Distell shareholders for the ordinary shares in Capevin (that Distell shareholders will receive in terms of the distribution). This Heineken offer is for a minority shareholding in Capevin, which will hold the Out-of-Scope Assets. This cash offer by Heineken is made in recognition of the fact that not all Distell shareholders can hold shares in an unlisted company, which Capevin will be.
Heineken will own a minimum of 65% of Newco after implementation of the Transaction, but Distell shareholders will be able to reinvest and hold up to 35% in Newco which will, at that time, hold:
- the In-Scope Assets (with 15% of the In-Scope Assets in South Africa held by a B-BBEE partner); and
- 100% of Heineken’s South African beer business;
- 100% of Heineken’s export business in Botswana, Zambia, Zimbabwe, eSwatini, Lesotho, Tanzania, Uganda, South Sudan and Kenya; and
- an indirect holding of 59.4% in Namibia Breweries Limited Breweries, a Namibian listed entity.
