Companies

Heineken eyes South African firm with 55pc stake in Kwal

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Kenya Wine Agencies Limited (KWAL) Chairman Muchiru Kuria. NMG PHOTO

Dutch brewer Heineken has offered to acquire a majority stake in South Africa’s beverage firm Distell Group in a transaction that will give it a stake in Kenya Wine Agencies Limited (Kwal) that distribuites Amarula and Viceroy brands.

Distell owns a 55 percent stake in Kenya Wine Agencies Limited (Kwal) which produces and markets wines, spirits, ciders and juices in the local and regional market.

Heineken’s acquisition of Distell will mark the entry of a major brewer with local production in the Kenyan market that is dominated by East African Breweries Limited, a subsidiary of Diageo Plc.

“Shareholders are advised that Heineken N.V. has approached Distell regarding the potential acquisition of the majority of Distell’s Business,” the Stellenbosch-based multinational said in a statement on Tuesday.

“The parties have entered into discussions which, if successfully concluded, may have an effect on the price of the company’s securities. Bearing in mind that there can be no certainty that an agreement will be reached, shareholders are advised to exercise caution when dealing in their Distell securities until a further announcement is made.”

In a separate statement, Heineken confirmed that it is currently engaged with Distell regarding a potential transaction. Heineken currently manages the distribution of its beer brands in Kenya and the regional market through its subsidiary Heineken East Africa Import Company Limited.

The Dutch brewer terminated the contract of its first distributor Maxam Limited, a company owned by business Ngugi Kiuna, and appointed other firms to supply its products to the market. The move sparked a legal battle. Maxam sued the multinational for ending the exclusive local distributorship and was awarded Sh1.8 billion. Heineken has appealed the award.

Acquisition of Distell is expected to see Heineken review its local distribution setup. The impending buyout of Distell comes after Kwal had received approval to develop a new site for its production operations in Kenya. Kwal’s spirit brands includes Hunters Choice, County Brandy and Kibao Vodka –one of the most popular drinks in the local market.