Heineken has lined up the offload of its Strongbow cider business in several African markets including South Africa in a move that brings the brewing giant’s acquisition of Distell a step closer.
Confirmation of the plans to divest of Strongbow in Botswana, Eswatini, Lesotho and Namibia, as well in South Africa, was included in last week’s recommendation by the latter’s Competition Commission to approve the takeover of Distell. Heineken initially announced the transaction, which values Distell at around EUR2.2bn (then-US$2.52bn), in November last year.
In its recommendation, the Competition Commission expressed concerns around the size of market share the combined business would have in South Africa’s cider category: “The proposed transaction is likely to substantially prevent or lessen competition in the relevant markets as the merged entity … would be the largest supplier of cider in South Africa,” the commission said.
Distell already owns Savanna and Hunter’s, the country’s two largest cider brands.
Among six “public interest commitments” that have also been agreed on, the merged entity will spend “more than” ZAR10bn (US$582.4m) on increasing its production capabilities in South Africa.
The commission’s statement also confirmed that a raft of Distell’s owned-spirits brands, including single malt Scotch whiskies Bunnahabhain and Deanston, will operate separately under the control of Capevin Holdings, a Distell subsidiary that existing shareholders and Heineken will control.
When contacted by Global Drinks Intel, a spokesperson for Distell said that flagship liqueur Amarula will be the merged company’s responsibility.
The transaction is on track to close before the end of this year.
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