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Diageo sells $780m brewing stake to Heineken
Diageo has offloaded its brewing interests in Jamaica, Malaysia and Singapore to Dutch rival Heineken in a deal worth $780.5 million, while increasing its stake in Ghanian brewer, Guinness Ghana Breweries.
Heineken CEO Jean-Francois van Boxmeer
The three part deal covers three continents and will see the Dutch brewer take control of Jamaican brewer Desnoes & Geddes, which produces Red Stripe and Dragon, having acquired Diageo’s 57.9% stake. Heineken already owned 15.5% of the company, taking its stake in the company to 73.3%. It is expected to make an offer for the remaining shares in accordance with the Jamaican Takeover Code. The transaction will see Diageo’s international distribution rights to Red Stripe lager transferred to Heineken.
Heineken has also acquired Diageo’s 49.99% stake in GAPL Pte Limited (GAPL), which is listed on the Malaysian Stock Exchange, taking its stake to 100% and giving it full ownership. GAPL is the licensee for Guinness and ABC Stout distribution for the Singapore market.
“Having greater commercial control in the important regions of South-East Asia and the Caribbean will allow us to maximize the strong potential of our brands in these growth markets,” said Heineken’s chief executive officer Jean-Francois van Boxmeer in a statement.
Finally Diageo has bought Heineken’s 20% stake in Guinness Ghana Breweries Limited (GGBL), a company listed on the Ghanaian Stock Exchange, taking its stake to 72.4%. However GGBL will continue to be Heineken’s exclusive distributor in Ghana.
The three-part transaction is worth $780.5 million to Diageo and will see the company take home a one-off profit of £440 million ($671 million) after tax.
“The transaction we have announced today continues our proactive approach to our portfolio, enhancing our focus on the core to achieve Diageo’s performance ambition”, said Ivan Menezes, chief executive of Diageo.
“It provides a strong route to consumer for Guinness which will grow the brand in these markets. I am pleased that this transaction meets the clear strategic objectives of both Heineken and Diageo.”
As part of this deal, Diageo will maintain long term distribution agreements for the brewing and distribution of Guinness and other Diageo beer brands in Malaysia and Singapore, and with D&G in relation to the brewing and distribution of Guinness and the distribution of spirits brands in Jamaica.