Heneiken buys Diageo’s shares in D&G

Diageo sold a 57% stake in Desnoes & Geddes to Heineken to give the Dutch brewer 73% of the Red Stripe brewer.

Following the deal, Heineken’s stake in D&G will go up to 73.3 per cent, while it will have full control of GAPL, which is the licensee for Guinness and ABC Stout distribution for the Singapore market.

At the same time, Diageo is boosting its ownership of Guinness Ghana Breweries by buying the Dutch company’s 20pc stake in the business.

Further, Diageo acquired Heineken’s 20 percent shareholding in Guinness Ghana Breweries Limited or GGBL which will increase Diageo’s shareholding in GGBL to 72.42 percent. Payment to Diageo will be substantially settled today and will be used to reduce borrowings.

The company will receive £515m from the deal, resulting in a profit after tax of £440m, and will use the funds to help it cut debt.

Shares in Diageo were marginally up at 1820.5 pence in London, while Heineken was up 0.7 per cent at 75.27 euros in Amsterdam.

Ivan Menezes the CEO at Diageo said the transaction continues the company’s proactive approach to its portfolio enhancing its focus on core products to achieve the performance ambition the company expects.

Jean-François van Boxmeer, Heineken’s chief executive officer, said: “Having greater commercial control in the important regions of south east Asia and the Caribbean will allow us to maximise the strong potential of our brands in these growth markets”.

The drinks giant Diageo has pulled off a deal with its rival Heineken to expand Diageo’s footprint in Africa. Diageo’s global distribution rights to Red Stripe lager will transfer to Heineken. “I am pleased that this transaction meets the clear strategic objectives of both Heineken and Diageo”.