Heineken NV is in talks with South African drinks maker Distell about a possible acquisition, the two companies have said, in what would mark a push into wine and spirits for the world's second-largest brewer.
Distell And Heineken Statements
Wines, spirits and cider maker Distell said that Heineken is interested in buying the majority of its business, sending its shares up more than 10% in early trade.
"Heineken...confirms that it is currently engaged with Distell regarding a potential transaction. Discussions are ongoing, but note that there can be no certainty that an agreement will be reached," Heineken said in a statement shortly afterwards.
Heineken and Distell, the world's largest and second largest cider makers, respectively, have gone head-to-head for the cider market in South Africa since Heineken launched its Strongbow brand there in 2016.
Ramping Up Business Elsewhere
In recent years, Distell has also been ramping up its business elsewhere on the continent as part of a drive to become Africa's next drinks champion, filling a gap that it sees as being left by SABMiller following its 2016 takeover by Anheuser-Bush InBev.
Jefferies Analysts Statements
Heineken's approach represents an opportunistic move to increase its exposure to Africa, where trading took a severe hit during the pandemic, Jefferies analysts Edward Mundy and Jaina Mistry said in a note.
"Whilst the wine/spirits business is not a natural fit, it points to [Heineken's] new CEO's appetite for growth and to explore new categories," they continued.
First Acquisition For Dolf van den Brink
Purchasing Distell would mark the first acquisition for Dolf van den Brink, who took charge at the Dutch brewer last June and has launched a plan to restore profit margins, partly through cutting 8,000 jobs.
Potential To Dispose Of Parts Of Distell's Business
Analysts also pointed to the potential for Heineken to dispose of some parts of Distell's business that it didn't want, including its liqueur brand Amarula and wines, which include well-known brands like Nederburg.