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Diageo plans to restructure operations in South Africa and Namibia

Zoom in font  Zoom out font Published: 2015-07-30  Views: 14
Core Tip: British alcoholic beverages firm Diageo has agreed to initiate restructure talks with joint venture partners Dutch brewer Heineken and the Ohlthaver & List (O&L) group of companies in South Africa and Namibia.
Upon completion of the transaction, Diageo is expected to operate through wholly-owned subsidiaries in South Africa and Namibia.

Diageo has agreed to sell its 42.25% stake in DHN Drinks, which holds the licenses for the combined beer, RTD and cider portfolio of Heineken, Diageo and Namibia Breweries (NBL), and 15% stake in NBL to Heineken. This will result in Heineken increasing its interest from 42.25% to 75% in DHN Drinks and 15.5% to 25% in NBL.

Diageo also agreed to divest 25% interest in the Sedibeng brewery in Gauteng, South Africa to NBL and transfer the associated shareholder loan to Heineken, which will retain the remaining 75% stake.

The company also agreed to purchase the remaining stake in brandhouse Beverages, the beer and spirits sales and marketing joint venture in South Africa. brandhouse Beverages will become wholly owned subsidiary of Diageo.

Diageo is expected to receive approximately £128m, subject to customary adjustments.

The transaction, which subject to regulatory approvals, is planned be completed by the end of this year.

Diageo CEO Ivan Menezes said: "From this leadership position we now believe that Diageo has the necessary scale to move to the next stage of growth for spirits, RTDs and our beer and cider portfolio in a focused, simplified ownership structure."

Meanwhile, NBL has signed a joint venture agreement with Heineken in South Africa to focus on developing the beer portfolio. By 2024, beer market in South Africa is expected to increase nearly 1.5% to 35 million hectoliters annually.

Heineken CEO Jean-François van Boxmeer said: "Our new structure allows us to focus solely on the beer category and strengthens our platform for continued growth."
 
 
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