Heineken negotiates to acquire Johann Rupert’s Distell Group

Heineken N.V. is making plans to buy off South Africa’s most extensive wine and spirits maker Distell Group in a deal estimated at as much as $2.5 billion.

Distell is linked to Johann Rupert, one of the country’s most prominent billionaires.

Distell spokesperson Frank Ford was reported by Bloomberg as confirming the news of the possible acquisition by the world’s second-largest brewer. He added that Heineken approached Distell about potentially acquiring most of its business in South Africa.

In a note to shareholders, Distell stated that it has entered into discussions with Heineken N.V. in this regard.

Distell also noted that the acquisition could affect the price of its securities, should it be concluded successfully.

If the acquisition goes through, South Africa’s beer industry will see a boost after three government COVID-19-related alcohol bans disrupted the on-trade* market last year. The market accounts for about 60 percent of alcohol sales in the country.

The bans also forced Heineken to stop working on constructing a 6-billion rand ($428 million) brewery. Similarly, crucial investments in the industry were delayed and scrapped due to new COVID-19 alcohol laws.

As a result, Anheuser-Busch InBev N.V.’s South African division took legal action.

Commenting on the potential acquisition, Lucky Ntimane, convener of the National Liquor Traders Council, said: “This is a vote of confidence in the country and the industry, despite being affected by a significant 20 weeks of bans. It speaks to the resilient nature of the alcohol industry in South Africa.”

The news of the potential takeover sent the brewer’s shares through the roof, rising by 5.03 percent by close the day to $1,071 per share (R15,026) on the Johannesburg Stock Exchange. This raised its market capitalization by 5.03 percent to $2.3 billion (R31.461 billion).

Distell is South Africa’s leading producer and marketer of wines, spirits, ciders and other ready-to-drink beverages.

The brewer has diverse brands, including Klipdrift brandy, Nederburg wine, Amarula cream liqueur, Savanna cider and Bain’s Cape Mountain Whisky.

Distell is partly owned by the investment vehicle Remgro Ltd., which is linked to Rupert. Public Investment Corp. also holds about 30 percent of the brewery company.

Forbes estimates Rupert’s net worth at $7.1 billion as of 2021.

*The on-trade market includes outlets like bars, restaurants, coffee shops, clubs, hotels, etc.