SENS: Diageo Plc said it\u2019s dissolving a joint venture with Heineken NV in South Africa and neighbouring Namibia three years earlier than planned so the world\u2019s largest distiller can fully own its operations in those countries.<\/p>\n
Diageo will receive about 128 million pounds ($199 million) from a series of transactions with Heineken and Namibia Breweries Ltd., the London-based company said Tuesday. The Smirnoff vodka maker will buy out the Dutch brewer\u2019s stake in Brandhouse, a sales and marketing entity, while Heineken will focus on beer, ending a joint venture with Diageo that began in 2004 to sell spirits, beer and cider in Africa.<\/p>\n
\u201cDiageo does not want to continue sharing profits with their joint venture partners as their spirits products are growing faster than beer,\u201d De Wet Schutte, an analyst at Avior Capital Markets, said by phone. \u201cThe read through is that spirits in South Africa is growing well.\u201d<\/p>\n
South Africa is Diageo\u2019s fifth-largest spirits market by units sold, and its share of the market has increased from 26 percent to 40 percent over the past nine years, the company said. The region is central to Chief Executive Officer Ivan Menezes\u2019 goal to boost the company\u2019s sales from the African continent to 20 percent of revenue, from about 13 percent now.<\/p>\n
\u201cThis is a positive move for Diageo,\u201d Schutte said. \u201cFor Heineken, it leaves them hanging in a sense. As a smaller player Heineken may find it hard to grow market share.\u201d<\/p>\n
The joint venture began in 2004, and was reconfigured in 2008 for a 10-year term as the companies sought to counter the dominance in the region of SABMiller Plc, which controls more than 90 percent of the South African beer market.<\/p>\n
Diageo was little changed at 1,820 pence at 9:30 a.m. in London, while Heineken rose 0.2 percent to 70.84 euros in Amsterdam.<\/p>\n
Under the deal, Diageo is selling a 42 percent stake in DHN Drinks Ltd. and a 15 percent stake in Namibia Breweries to Heineken. Diageo will also sell a 25 percent stake in a brewery in Gautend, South Africa to the Namibian beermaker.<\/p>\n
\u201cDiageo has the necessary scale to move to the next stage of growth,\u201d Diageo CEO Menezes said in the statement.<\/p>\n","protected":false},"excerpt":{"rendered":"
SENS: Diageo Plc said it\u2019s dissolving a joint venture with Heineken NV in South Africa and neighbouring Namibia three years earlier than planned so the world\u2019s largest distiller can fully own its operations in those countries. Diageo will receive about 128 million pounds ($199 million) from a series of transactions \u2026 Continue reading