KINGSTON – Heineken International has acquired an additional 1.6 billion shares in Diageo, parent company of Desnoes and Geddes Limited (D&G), increasing its ownership in the company to 73.32 per cent.
British beverage group Diageo PLC was the largest shareholder of D&G with a 57.87 per cent shareholding through Udiam Holdings AB of Sweden.
On Wednesday, Heineken announced that it has acquired the entire issued share capital of Udiam Holdings AB for US$4.2 billion, increasing the approximately 15.45 per cent share capital the firm had held in the liquor distributor.
The company says it is now seeking to acquire the remaining the shares of D&G and is offering US$0.259 (J$30.6) per share.
Upon acquiring seven per cent of the remaining shares, Heineken will be delisting the D&G’s shares from the Jamaica Stock Exchange (JSE).
“Upon delisting, D&G shares will not be tradable on the floor of the JSE.
“All transfers of D&G shares will render both the transferor and transferee liable to transfer tax and stamp duty, and dividends paid (if any) on D&G shares will not be eligible for the special five per cent rate of withholding tax applicable to shares of listed companies held by Jamaica residents (but will be subject to tax at the full rate with respect to any such dividends paid),” a release from Heineken stated.
As part of the agreement, Heineken will be transferring 20 per cent of its holding in Guinness Ghana Breweries Limited to Diageo, allowing the company to increase its shareholding in the Brewery to 72.42 per cent.
The net cash consideration paid to Diageo on the transaction is US$780.5 million, which will be used to reduce its borrowings. Additionally, the acquisition will result in after-tax profit of US$668 million for the company.
Heineken, however, is seeking to consolidate its beer business in the Caribbean and south-east Asia. The company currently operates in Jamaica, Ghana, Malaysia, and Singapore.
“Having greater commercial control in the important regions of Southeast Asia and the Caribbean will allow us to maximise the strong potential of our brands in these growth markets,” Heineken Chief Executive, Jean-François van Boxmeer, stated in a release from the company.
“Our close collaboration with Diageo has been very productive over the years, and I would like to thank them for their valued partnership,” she added.
Diageo is the brewer of Guinness and the distiller of the spirits Captain Morgan, Johnnie Walker, and Smirnoff. Its subsidiary D&G is a leading Jamaican brewer and beverage producer of one of the country’s best known exports – Red Stripe Beer. It also produces Dragon, the local stout brand that competes alongside Guinness.
“The transaction we have announced today continues our proactive approach to our portfolio, enhancing our focus on the core to achieve Diageo’s performance ambition,” chief executive officer of Diageo, Ivan Menezes, said.
“It provides a strong route to consumers for Guinness ,which will grow the brand in these markets. I am pleased that this transaction meets the clear strategic objectives of both Heineken and Diageo.” (Observer)