Diageo Sells United National Breweries to Delta Corp

Diageo Plc announced on Thursday it has entered into an agreement for the sale of United National Breweries (UNB), a maker of sorghum-based traditional African beer called Chibuku in South Africa to Delta Corp of Zimbabwe.

The British-based alcoholic beverage firm said that the transaction, which is subject to regulatory approval, is expected to close in the second half of F19. Sale proceeds, which are not material, have not been disclosed. The transaction is expected to be eps neutral in its first full financial year.

Delta Corp, Zimbabwe’s largest company and a subsidiary of Anheuser-Busch InBev is a leader in sorghum-based beer with its own brand of Chibuku. The purchase by Delta would be its second outside of Zimbabwe. It acquired Zambia’s National Breweries Plc, also a brewer of Sorghum-based Chibuku Shake-Shake in January, making it the largest producer of such brand of beer.

Delta has been bulking up after the Coca-Cola Company issued a notice to terminate its bottler agreement with the company following the “big beer merger” of 2016, which saw AB InBev acquire the world wide assets of SABMiller, Delta’s former largest investor. With Coca-Cola not wanting to be a partner of AB InBev in its bottling operations, it issued a notice to terminate bottler agreements with Delta, a move that could see Delta lose a third of its revenue and profits. Delta is one of two firms that bottles Coca-Cola products in Zimbabwe.

Diageo took full control of United Breweries in 2015 after earlier taking a 50% stake in the company in 2013 from Pestello Investments, a group linked with Indian drinks businessman and former Managing Director of United Spirits, Vijay Mallya.

Diageo is a global leader in beverage alcohol with an outstanding collection of brands across spirits, beer and wine categories. These brands include Johnnie Walker, Crown Royal, J&B, Buchanan's and Windsor whiskies, Smirnoff, Cîroc and Ketel One vodkas, Captain Morgan, Baileys, Don Julio, Tanqueray and Guinness.

Diageo is a global company, and our products are sold in more than 180 countries around the world. The company is listed on both the London Stock Exchange (DGE) and the New York Stock Exchange (DEO). For more information about Diageo, our people, our brands, and performance, visit us at www.diageo.com. Visit Diageo’s global responsible drinking resource, www.DRINKiQ.com, for information, initiatives, and ways to share best practice.

December 21, 2018