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    HEIA   NL0000009165

HEINEKEN N.V.

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Heineken in talks to buy South African drinks maker Distell

05/18/2021 | 04:09am EDT

* 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 second-largest brewer.

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 trade.

"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 after.

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 0853 GMT.

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, Kirsten Donovan)


ę Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
ANHEUSER-BUSCH INBEV -0.03% 58.19 Real-time Quote.2.10%
DISTELL GROUP HOLDINGS LIMITED 1.22% 171.82 End-of-day quote.80.79%
HEINEKEN N.V. 0.22% 99.58 Real-time Quote.8.95%
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Financials
Sales 2021 21 576 M 25 474 M 25 474 M
Net income 2021 1 621 M 1 914 M 1 914 M
Net Debt 2021 13 849 M 16 352 M 16 352 M
P/E ratio 2021 37,0x
Yield 2021 1,17%
Capitalization 57 215 M 67 702 M 67 554 M
EV / Sales 2021 3,29x
EV / Sales 2022 2,98x
Nbr of Employees 84 000
Free-Float 41,2%
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Mean consensus OUTPERFORM
Number of Analysts 24
Last Close Price 99,38 €
Average target price 103,47 €
Spread / Average Target 4,12%
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Managers and Directors
Rudolf Gijsbert van den Brink Chairman-Executive Board
Harold van den Broek Chief Financial Officer
R. Jean-Marc Sidney HuŰt Chairman-Supervisory Board
Ronald den Elzen Chief Technology & Digital Officer
V. C. O. B. J. Navarre Member-Supervisory Board
Sector and Competitors
1st jan.Capi. (M$)
HEINEKEN N.V.8.95%67 702
ANHEUSER-BUSCH INBEV2.10%135 847
AMBEV S.A.8.12%51 627
CONSTELLATION BRANDS, INC.3.34%43 294
BUDWEISER BREWING COMPANY APAC LIMITED-11.33%38 555
HEINEKEN HOLDING N.V.9.09%28 646