* Heineken interested in majority of Distell's business
* Talks ongoing, no certainty of success, firms say
* Would see Heineken diversify into wines and spirits
* Distell shares leap, Heineken's rise slightly
JOHANNESBURG, May 18 (Reuters) - Heineken NV is in
talks with South African drinks maker Distell about a
possible acquisition, the two companies said on Tuesday, in what
would mark a push into wine and spirits for the world's
Wines, spirits and cider maker Distell, which had a market
capitalisation of 31.8 billion rand ($2.27 billion) at Monday's
close, said Heineken was interested in buying the majority of
its business, sending its shares up more than 10% in early
"Heineken... confirms that it is currently engaged with
Distell regarding a potential transaction. Discussions are
ongoing, but note that there can be no certainty that an
agreement will be reached," Heineken said in a statement shortly
Heineken and Distell, the world's largest and second-largest
cider makers respectively, have gone head-to-head for the cider
market in South Africa since Heineken launched its Strongbow
brand there in 2016.
Distell has in recent years also been ramping up its
business elsewhere on the continent as part of a drive to become
Africa's next drinks champion, filling a gap it sees as left by
SABMiller following its 2016 takeover by Anheuser-Bush InBev
Heineken's approach represents an opportunistic move to
increase its exposure to Africa, where trading took a severe hit
during the pandemic, Jefferies analysts Edward Mundy and Jaina
Mistry said in a note.
"Whilst the wine/spirits business is not a natural fit, it
points to (Heineken's) new CEO's appetite for growth and to
explore new categories," they continued.
Purchasing Distell would mark the first acquisition for Dolf
van den Brink, who took charge at the Dutch brewer last June and
has launched a plan to restore profit margins, partly through
cutting 8,000 jobs.
Analysts also pointed to the potential for Heineken to
dispose of some parts of Distell's business it didn't want,
including its liqueur brand Amarula and wines, which include
well-known brands like Nederburg.
Distell's shares, which have taken a beating since the
outbreak of COVID-19 and successive bans on alcohol in its home
market as a result, pared earlier gains to stand 4% higher by
Heineken shares meanwhile were 0.32% higher, also dropping
back slightly from earlier in the day.
($1 = 14.0305 rand)
(Reporting by Nqobile Dludla and Emma Rumney in Johannesburg
and Philip Blenkinsop in Brussels, editing by Louise Heavens,