South Africa approves Heineken’s takeover of Distell with conditions

South Africa | After nine months of investigation, the Competition Commission, on 9 September, okayed the USD 2.2 billion deal, on condition that Heineken honours its promise to divest its Strongbow brand in South Africa, Namibia, and Botswana.

Aside from Distell, whose cider brands Savannah and Hunter’s are the country’s largest, Heineken is the only significant manufacturer of ciders in South Africa. It launched Strongbow in 2016 and Fox in 2020. The combined entity would have had a market share in excess of 65 percent.

Who will buy the Strongbow brand?

The Commission said the divesture shall “promote transformation in the industry”, which is taken to mean that Strongbow should be sold to a black-owned firm.

Heineken and the Commission also agreed that Heineken will invest ZAR 10 billion (USD 585 million) over five years in production capacities – which is easy as Heineken has already revived plans build a 3 million hl brewery near Durban. Heineken will also set up various funds to promote local industries. Moreover, Heineken committed itself to not retrench any employees below specified managerial grades for five years.

The Commission’s ruling will now go to the Competition Tribunal, which has the final say.

Namibian watchdog sets its conditions too

In close coordination with its South African colleagues, the Namibian regulator, on 13 September, decreed that Heineken may take over Distell and acquire control of Namibia Breweries (NBL), provided Heineken does not retrench any employees below management level for five years.

Further, NBL and Distell must allow on-and off-premise operators to allocate up to 10 percent of space in beverage coolers owned by NBL or Distell to a supplier of their choice (currently prohibited). In addition, the Commission determined that products consumed in Namibia must be manufactured or at least bottled in Namibia.

Lastly, Heineken must divest the Strongbow licence in perpetuity and royalty-free to a purchaser within one year.

Since Heineken has suggested the sale of Strongbow, many wonder which firm the Dutch have in their sights to buy the cider brand?