South African Breweries (SAB) Objects to Heineken's Takeover of Distell

South African Breweries (SAB) Objects to Heineken's Takeover of Distell
Photo: 24.01.2023 88

According to South African news outlet News24, the SAB presented its opposition at a hearing at the Competition Tribunal into the deal.

South African Breweries, a subsidiary of Anheuser-Busch InBev, has reportedly objected the Heineken’s takeover of Distell and would prefer to see Distell sell off cider brands like Hunter’s or Savanna as part of the deal.

The deal – announced in November 2021 – received South Africa’s Competition Commission’s clearance in September on the condition Heineken sells its Strongbow cider business in South Africa and other countries that are members of the Southern African Customs Union.

Strongbow competes with Distell’s Hunter’s Dry and Savanna brands in the South African market, which led the Competition Commission to rule that the merged entity will have a significant market share, “substantially” lessening competition in the cider and flavored alcoholic beverages markets.

The commission and the merging parties agreed that the sale of Strongbow will be to "a credible and majority black-owned business" in order to promote new entry and transformation. 

Justifying the rationale for the coming together of Heineken and Distell, Jerome Wilson SC, acting on behalf of the companies, added that the deal "entails the coming together of complementary product portfolios, distribution, and other arrangements" and will allow the merging parties "to compete more effectively with AB InBev’s brands."

SAB, however, maintains the deal will result in the removal of an effective competitor in South Africa. 

Under the terms of the agreement set out between the Commission and Heineken in September, the company will also invest more than ZAR10bn (US$584.4m) in its business in South Africa over a period of five years “to maintain and grow the aggregate productive capacity” of the operations.

Other conditions include the establishment of a share ownership scheme, the formation of a “supplier development fund” and the setting up of an R&D hub in South Africa.

Heineken, the world's second-largest brewer, announced in late 2021 it was looking to buy Distell for about R40 billion, which would create a new regional drinks giant in competition with larger rival Anheuser-Busch InBev.

That deal was approved by Distell's shareholders in February.

The Competition Tribunal acts like a court on merger matters and has the final say about large takeovers.

Sources: News24, Food Business Africa

South Africa 

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