Diageo Plc, the world’s largest spirits company, has said that it has sold its stakes in Jamaican brewer Desnoes & Geddes Ltd and GAPL Pte Limited, the majority owner of Malaysia’s Guinness Anchor Berhad, to Heineken NV for $780.5 million.
According to a Reuters report, the transaction also includes Diageo’s acquisition of a 20 per cent stake in Guinness Ghana Breweries Ltd from the Dutch brewer, raising Diageo’s total stake in GGBL to 72.42 per cent.
The maker of Smirnoff vodka, Guinness beer and Johnnie Walker whisky said the deal with Heineken would increase the companies’ focus in beer businesses in Jamaica, Malaysia, Singapore and Ghana.
Diageo sold its 57.87 per cent stake in D&G, the maker of Red Stripe beer, and its 49.99 per cent stake in GAPL to Heineken, the companies said yesterday.
Diageo said the deals would result in an exceptional profit after tax of about 440 million pounds ($671 million).
The company generates one-fifth of its revenue from beer, mostly the Guinness brand, which is growing more slowly than spirits. Despite the weak performance, Diageo often says the business is critical, since it gives it a route to market in Africa, making it easier to sell its spirits such as Johnnie Walker whisky.
“It (the deal) provides a strong route to consumers for Guinness which will grow the brand in these markets,” Chief Executive Ivan Menezes said in a statement.
Heineken, the world’s third-largest brewer, said it would be able to drive the investment and strategic direction of the operating companies in Jamaica and Malaysia.
Following the deal, Heineken’s stake in D&G will go up to 73.3 per cent, while it will have full control of GAPL, which is the licensee for Guinness and ABC Stout distribution for the Singapore market.
Shares in Diageo were marginally up at 1820.5 pence in London, while Heineken was up 0.7 per cent at 75.27 euros in Amsterdam.