Dutch brewer Heineken is set to introduce new liquor and beer brands in Kenya from the Southern Africa market after tying up its acquisition of South Africa-based Distell Group and Namibia Breweries Limited (NBL).
Completion of the deal opens the door for the new Heineken subsidiary to market in the Kenyan and wider East African region beer brands from the NBL stable, which includes Windhoek, Tafel and King lagers, Camelthorn, Hansa Draught beer and Strongbow Cider.
Distell is also likely to expand the local offerings of its product portfolio which comprises spirits, wines, cider, whisky, and gin. Heineken is a specialist in premium beer and cider brands.
The tie-up that has now received the final approval from South Africa’s competition authority will see the formation of a new entity called Sunside Acquisitions Limited (Newco) that will be jointly owned by Heineken (65 percent) and Distell (35 percent).
As part of the transactions, Distell will bring its interests in its subsidiaries including Kenya Wine Agencies Limited (Kwal) to Sunside, while Heineken’s distribution businesses in Tanzania, Uganda, Kenya, and South Sudan will also be transferred to the subsidiary.
Heineken said last week that the new subsidiary will be focused on developing its business in certain key markets outside of South Africa and Namibia, including Kenya, Uganda, Tanzania, Zambia, Botswana, Zimbabwe and South Sudan while continuing to service Lesotho and Eswatini.
“With respect to Newco’s business in Africa, the combination of the three Heineken, Distell and NBL export businesses, together with Distell’s on-the-ground capabilities in key markets, will result in an expanded and enhanced footprint in the region,” said Heineken in a prospectus for the deal.
“This will provide the opportunity for Newco to invest behind and grow the consolidated brand portfolio in existing and new markets (as the consumer demands), and in some markets, such as Kenya and Tanzania, Newco will have a materially stronger platform for the distribution of the full portfolio, including NBL products, which are already sold there.”
The parties said the transaction will result in a stronger operation that will grow and compete more effectively against rivals such as Diageo.
The Dutch brewer valued its investment in the deal —which was first announced in November 2021 —at approximately €2.4 billion (Sh326.6 billion).
Half of the consideration (€1.2 billion) is in the form of a cash pay-out funded from bonds, existing cash resources and committed credit facilities.
The remaining half is provided through the contribution of its currently owned assets into Newco.