Heineken and Distell’s R40.1bn merger has been given the go ahead by the Competition Tribunal almost 18 months since the tie-up was announced.

BusinessLIVE says this will see Distell delisting from the JSE with shares suspended from trade from 22 March. In November 2021, Heineken offered R180 for Distell shares in two parts of the business.

The talks about the deal were announced in May that year. The offer comes at a time SA has been struggling to attract foreign investment. The parties say the deal will create a brewing giant better able to compete with SAB, part of world’s largest brewer, AB InBev.

The tribunal updated its website yesterday to say the deal had been approved with conditions. It is still to publish details of the conditions.

Distell said in a JSE stock filing announcement that the conditions ‘align broadly’ with those proposed by the Competition Commission. 

Heineken had offered to invest R10bn over five years and set up an employee share ownership scheme that will transfer more than R3bn in equity to workers.

It planned to invest R175m in a tavern transformation programme and invest R400m in a supplier development fund. Because Heineken is buying the two biggest cider brands locally – Savanna and Hunter’s Dry – the brewing company had offered to sell its Strongbow brand in SA, Lesotho, Botswana, Namibia and eSwatini to ensure it does not own all three brands. The Competition Commission had said the sale has to be conducted ‘in a manner that promotes transformation’.

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The long delay probably benefitted Heineken because Distell is more valuable today than 18 months ago, says Sasfin Securities chief global equities strategist David Shapiro.

‘If you have looked at the sets of results that have come out (since the deal was first announced) – they have been very good numbers, and unfortunately the price won't be adjusted.’

In addition, Distell hasn't paid dividends since the transaction was first announced. 

Fin24 reports that Protea Capital Management senior equity analyst Richard Cheesman said ‘the balance sheet is looking pristine’. ‘The price 18 months ago was a fair price, so Heineken is getting a better deal today because of the delays,’ he said. Distell said the transaction is expected to be completed in April.

Full Fin24 report