Brewing giant Heineken going after majority stake in Distell (Savanna, Amarula)
Dutch brewing company Heineken is making a move on South Africa's Distell Group.
The world's second-biggest brewer has approached Distell for the purchase of the majority of its business.
Distell's brands include Savanna, Hunter’s Dry, Amarula, Nederburg and Durbanville Hills.
Bloomberg reports that a takeover of the SA group would be Heineken’s most significant transaction in years.
What is Heineken seeing that is so attractive in Distell at this point?
Bruce Whitfield interviews Keith McLachlan, Investment Officer at Integral Asset Management.
Heineken is obviously a global beer business, but many people don't realise it has a very significant side element to it.Keith McLachlan, Investment Officer - Integral Asset Management
Distell is really one-third cider, one-third spirits and one-third wine... In my opinion, the shining gem of the business lies with the cider side.Keith McLachlan, Investment Officer - Integral Asset Management
I think there's a good chance... that it's the cider element of Distell that is attracting Heineken to the table.Keith McLachlan, Investment Officer - Integral Asset Management
"There are just so many synergies in fitting these two businesses together" McLachlan pronounces with enthusiasm.
He points out that while Heineken might be dominant in cider across swathes of the world, this is not the case in South Africa.
Likewise, the exportability of Savanna and Hunter's can work across Heineken's global distribution network.Keith McLachlan, Investment Officer - Integral Asset Management
And then, more subtly, within Distell's cider business they've got their Springs factory that has a fair amount of spare capacity, so you can ramp up production... you could produce Heineken's Strongbow and then export to the global market...Keith McLachlan, Investment Officer - Integral Asset Management
Listen to McLachlan's take on Heineken's interest in Distell:
This article first appeared on CapeTalk : Brewing giant Heineken going after majority stake in Distell (Savanna, Amarula)
Source : https://cdn.pixabay.com/photo/2016/10/13/19/18/heineken-1738593960720.jpg