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    DGH   ZAE000248811

DISTELL GROUP HOLDINGS LIMITED

(DGH)
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Heineken to buy S.Africa's Distell and Namibian Breweries

11/16/2021 | 07:11am EST
A bottle of Amarula, produced by South Africa's Distell, is seen at a bar in Cape Town

(This Nov. 15 story corrects quote in para 4 to "it should not be seen", adding word 'not')

By Philip Blenkinsop and Promit Mukherjee

BRUSSELS/JOHANNESBURG (Reuters) - Dutch brewer Heineken said on Monday it planned to take control of South Africa's Distell Group Holdings and Namibia Breweries Ltd to form a southern Africa drinks group worth 4 billion euros ($4.6 billion).

The takeover of Distell would mark a push into wine and spirits for the world's second-largest beer maker, with liqueur brand Amarula and wines labels Nederburg and Two Oceans. Heineken will sell Distell's British-based Scotch whiskies.

Heineken Chief Executive Dolf van den Brink said the deal would improve logistics and increase points of sale, often shared for beer, wine and spirits in South Africa, and would do the same in Namibia. It also offered growth in other African markets, such as Kenya and Tanzania, he said.

"It should not be seen that we now start to buy spirits and wine companies all over the world," Van den Brink told Reuters.

Heineken will pay 1.3 billion euros in cash and add its existing South African business, to secure at least 65% of the new business.

The deal will value Distell at about 40.1 billion rand ($2.6 billion) or 180 rand per share, Distell said, a discount of 1.4% to the stock's Friday close.

Heineken will take control of regional partner Namibian Breweries Ltd (NBL), with a current market valuation of about 400 million euros.

SIGNIFICANT SYNERGIES

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.

Van den Brink said the brewer expected cost and revenue synergies with benefits across production, logistics and procurement, but no job losses in the near term.

The overall transaction is expected to increase margins over the medium term and boost earnings per share within the first year after completion.

The takeovers would be the first major deal for 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. Heineken did increase its stake to take full control of India's largest beer maker United Breweries Ltd in June.

Distell did not pay a dividend for the financial year ended June 30, as a condition for Heineken's takeover proposal.

Distell CEO Richard Rushton said the deal was likely to close by the end of December 2022 and shareholders would not be paid any interim or full-year dividend.

Distell shares were trading down 7% at 169.34 rand as investors were not enthused by the offer price.

"Heineken and Remgro (Distell's holding company) are the winners in this," said Richard Cheesman, senior analyst with hedge fund Protea Capital Management, which holds shares in Distell.

"It matters less to Remgro what price Heineken is paying as it will remain invested in the unlisted Newco (new company), but shareholders were expecting that Remgro's influence could have resulted in a higher offer."

Heineken's shares were up 0.9% at 98.22 euros at 1425 GMT.

($1 = 0.8734 euros)

($1 = 15.2201 rand)

(Additional reporting by Sachin Ravikumar and Aby Jose Koilparambil in Bengaluru; Editing by Nick Macfie, Edmund Blair and David Evans)


ę Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
DISTELL GROUP HOLDINGS LIMITED 0.00% 168.5 End-of-day quote.-0.18%
HEINEKEN N.V. 0.80% 98.7 Real-time Quote.-0.95%
NAMIBIA BREWERIES LIMITED -0.02% 49.47 End-of-day quote.-0.04%
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Financials
Sales 2022 32 164 M 2 098 M 2 098 M
Net income 2022 2 472 M 161 M 161 M
Net Debt 2022 2 505 M 163 M 163 M
P/E ratio 2022 15,1x
Yield 2022 -
Capitalization 37 074 M 2 435 M 2 419 M
EV / Sales 2022 1,23x
EV / Sales 2023 1,11x
Nbr of Employees 4 440
Free-Float 37,4%
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Technical analysis trends DISTELL GROUP HOLDINGS LIMITED
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Mean consensus HOLD
Number of Analysts 1
Last Close Price 168,50 ZAR
Average target price 180,00 ZAR
Spread / Average Target 6,82%
EPS Revisions
Managers and Directors
Richard Mark Rushton Group Chief Executive Officer & Director
Lucas Cornelis Verwey Group Chief Financial Officer & Executive Director
Jan Jonathan Durand Non-Executive Chairman
Gugulethu Patricia Dingaan Independent Non-Executive Director
Prieur du Plessis Independent Non-Executive Director
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