Diageo (DGE) has agreed a $780.5m (£515m) three-part deal with Heineken to swap assets in emerging markets.
The transactions, which will net the Smirnoff and Johnnie Walker £440m in profits, would be mutually beneficial and allow the two companies to concentrate their resources in the individual markets, a statement said.
Diageo has sold its 58% stake in Desnoes & Geddes, which makes Red Stripe and other stouts and spirits in Jamaica, and its 50% holding in Malaysia and Singapore beer business GAPL to Heineken.
At the same time the group increased its ownership of Guinness Ghana Breweries to 72% with the acquisition of Heineken’s 20% stake.
As a result Heineken will now have a 73% share of D&G and full ownership of GAPL.
The deals are worth $780.5m (£515m), with Diageo to book £440m in profits on the disposals which it said would be used to reduce borrowings.
Earlier this year (July) Diageo sold its stakes in a joint venture with Heineken as part of a restructuring of operations in South Africa and Namibia.
“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,” Diageo CEO Ivan Menezes said
“It provides a strong route to consumer for Guinness which will grow the brand in these markets.”
Heineken CEO and chairman Jean-François van Boxmeer added: “Today’s transaction represents another important step towards ensuring that our portfolio of assets and participations is optimally structured to support our strategic agenda. Having greater commercial control in the important regions of South-East Asia and the Caribbean will allow us to maximise the strong potential of our brands in these growth markets. Our close collaboration with Diageo has been very productive over the years and I would like to thank them for their valued partnership.”
GAPL holds 51% of Guinness Anchor Berhad (GAB) in Malaysia and is the licensee for Guinness and ABC Stout distribution for the Singapore market. As part of these transactions, Diageo will have long-term brewing and distribution agreements with GAB for Guinness and other Diageo beer brands in Malaysia and Singapore and with D&G for Guinness and spirits brands in Jamaica.
Diageo’s international distribution rights to Red Stripe lager will transfer to Heineken. Guinness Ghana Breweries will continue to be Heineken’s exclusive distributor in Ghana.