The South African Competition Commission has conditionally approved Heineken’s proposed acquisition of a controlling interest in Namibian Breweries Investment Holdings Limited (NBLIH) and operations of Distell Group Holdings Limited.
“The Commission found that the proposed transaction is likely to substantially prevent or lessen competition in the relevant markets as the merged entity will be a dominant supplier of FABs with a market share above 65% and would be the largest supplier of cider in South Africa. To address the competition concerns arising from the transaction, Heineken has committed to divest its Strongbow business in South Africa and other SACU countries (Strongbow Divestiture). The Strongbow Divestiture will be implemented in a manner that promotes transformation in the industry,” the commission said on Friday.
To address the commission’s concerns, Heineken will sell Strongbow in “a manner that promotes transformation in the industry.”
Parties have also agreed to a number of public interest commitments, including R10 billion over five years to maintain and grow the productive operations in SA, as well as an employee share ownership scheme that would transfer more than R3 billion equity to its local workers.
The deal will see the creation of two separate businesses: one containing the cider, ready-to-drink beverages, and spirits and wine business; and the other consisting of Distell’s remaining assets, including its Scotch whisky business, which will be housed in a Distell subsidiary named Capevin. Once final conditions are approved, Heineken will own a minimum of 65% of the new entity after implementation of the transaction, but Distell shareholders will be able to reinvest and hold up to 35%.
According to Namibia Breweries Limited (NBL), its planned acquisition by Heineken NV has the potential to attract investment worth N$10 billion for the country.
Patrick Smith, a Partner at RBB Economics in South Africa, in June said the transaction will result in the local production of Distell products, which have a retail value of approximately N$1 billion, which are currently being imported into the country, ensuring NBL’s ability to sustainably use capacity in future.
The NBL, Heineken NV deal is, however, still subject to approval by the Namibia Competition Commission (NaCC).
Heineken NV has offered to buy Ohlthaver & List Group of Companies (O&L)’s 50.01% stake in NBL Investment Holdings (Proprietary) Limited (NBLIH), the controlling shareholder with a 59.4% shareholding in Namibian Breweries Limited (NBL).
Heineken already owns a 49.99% interest in NBLIH and will become the majority shareholder of the brewer on completion of the transaction this year.
Heineken announced last November its intention to buy South Africa’s Distell Group Holdings and NBL to form a southern Africa drinks group worth US$4.6 billion.
