British spirits group Diageo and Dutch brewer Heineken said on Friday they had agreed to form two new joint ventures in South Africa to combine their drinks businesses and also build a brewery.
Diageo, which makes Smirnoff vodka and Johnnie Walker whisky, and Heineken, famed for its eponymous lager, said they had teamed up with Namibia Breweries (NBL) to form DHN Drinks.
This will combine their beer, cider and ready-to-drink (RTD) businesses in South Africa and build on the three firms’ current cost-sharing venture in the country.
Diageo and Heineken will each own 42,25% of DHN Drinks, and NBL will own 15,5%. Each party will share in the profits of DHN Drinks in proportion to their shareholding.
Diageo and Heineken said they had also agreed to form a second joint venture in South Africa to construct and operate a brewery in Gauteng.
The brewery, which will have an initial capacity of three million hectolitres, will be 75% owned by Heineken, with Diageo holding a 25% stake.
Across both new ventures, Heineken’s total net investment will be $401-million. In the first two years, Diageo will invest $202-million in both joint ventures, the two firms said in a statement. — Reuters