The South African Competition Tribunal has approved Heineken’s offer to acquire control of Distell Group Holdings Limited. Following approvals from the Namibia Competition Commission, the Common Market for Eastern and Southern Africa, and all other relevant jurisdictions, the decision is the final regulatory approval, paving the way for the establishment of an African beverage champion at the regional level.
Heineken announced its intention to acquire control of Distell and Namibia Breweries Limited (‘NBL’), which would be combined with Heineken South Africa (‘HSA’) to form a new Heineken majority-owned business in November 2021. (Newco).
“We are delighted the Competition Tribunal has approved the deal,” said Dolf van den Brink, CEO and Chairman of the Executive Board of Heineken. We are very excited to bring three strong businesses together to form a regional beverage champion with a unique multi-category offer to better serve consumers, customers, and create shared societal value across Southern Africa. We are committed to being a strong growth partner and making a positive impact in the communities in which we operate, as evidenced by the proactive and comprehensive public interest package we’ve proposed.”
The approval today gives the go-ahead for an ambitious package of public-interest commitments, including ongoing business investment, broad-based black economic empowerment, job creation, localisation and supplier development, talent development, and contribution to the region’s economic development.
Previously, a Transaction Update Announcement (TUA) outlining the remaining scheme details and Distell shareholder election process, as well as the remaining salient dates and times relating to the Transaction, was published. The transaction is expected to go into effect in April.
Heineken will invest approximately €2.4 billion in Newco in exchange for a 65% stake. This includes:
A cash payout of about €1.2 billion, to be funded by bonds, existing cash resources, and committed credit facilities; and
The contribution of its current assets, which include 75% of HSA, 100% of its export businesses in certain other African markets, and a minority stake in NBL.
The Transaction is expected to be EPS (beia) accretive this year by a low-single-digit percentage and margin accretive over the medium term, assuming significant revenue and cost synergies are realized. Heineken’s pro-forma net debt to EBITDA (beia) ratio is expected to rise slightly after completion.