South Africa: AB InBev objecting to proposed Heineken takeover of Distell

Anheuser-Busch InBev, the parent company of South African Breweries (SAB), is objecting to a proposed takeover by Dutch giant Heineken of Distell, News24 reported on January 18.

It wants Distell to sell its cider brands like Hunter's or Savanna as part of the deal.

Heineken has offered to sell its cider brand Strongbow to address concerns about competition. Strongbow competes against Distell's Hunter's Dry and Savanna brands, and the Competition Commission found the merged entity will have significant market share, which will "substantially" lessen competition in the cider and flavoured alcoholic beverages markets.

The commission has accepted Heineken's proposal to sell Strongbow and has recommended that the takeover be approved. The Department of Trade Industry and Competition (DTIC) also supports the transaction.


On Wednesday, hearings at the Competition Tribunal into the deal started, and SAB said it plans to oppose the deal. It will give evidence on Thursday.

A spokesperson for SAB said the merger will result in the removal of an effective competitor. The group also has questions about the effectiveness of the sale of Strongbow, and wants Distell to sell one of its other cider brands instead.

During the hearing on Wednesday, advocate Jerome Wilson SC, acting on behalf of Heineken and Distell, argued that "it is entirely unclear what interest SAB has, apart from the obvious interest in seeking to delay or frustrate the approval of the transaction".

"SAB would prefer that the merger parties offer up other brands in the flavoured alcoholic beverages (FAB) sector. The merger parties argue that the Tribunal must consider whether this is outweighed by the considerable public interest benefits of the transaction," said Wilson.

The commission and the merging parties agreed that the sale of Strongbow will be to "a credible and majority black-owned business" in order to promote new entry and transformation.

"The proposed merger is overwhelmingly positive for competition. The primary intention behind the merger is to enable Heineken and Distell to be able to compete more effectively with the leviathan in alcoholic beverages – AB InBev (SAB)," stated Wilson.

"The merger entails the coming together of complementary product portfolios, distribution, and other arrangements, and will unlock economies of scale and scope to enable the merger parties to compete more effectively with AB InBev’s brands."

Heineken and Distell have agreed with the DTIC to invest R16 billion over a period of five years. This includes investing in the construction of a new greenfield brewery in South Africa, as well as significant procurement commitments, employment conditions, and black ownership.

The merging parties are also agreeing to procurement commitments and employment retention conditions.

Heineken, the world's second-largest brewer, announced in late 2021 it was looking to buy Distell for about R40 billion, which would create a new regional drinks giant in competition with larger rival Anheuser-Busch InBev.

That deal was approved by Distell's shareholders in February.

The Competition Tribunal acts like a court on merger matters and has the final say about large takeovers.

The tribunal hearing continues on Thursday, January 19.

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