Diageo, Heineken Announce Exchange of Emerging-Market Assets

By Ed Ballard

LONDON--Drinks companies Diageo PLC and Heineken NV Wednesday announced an exchange of emerging-market brewing assets in a deal that will result in a profit for Diageo of 440 million pounds ($671 million).

In a deal the companies said will bring "increased focus to their respective beer businesses", London-based Diageo has sold its 57.9% stake in Desnoes & Geddes Ltd. to Heineken, increasing the Dutch company's stake to 73.3%. D&G is the Jamaican brewer of Red Stripe lager and Dragon stout.

Diageo also sold 49.99% of GAPL Pte Ltd., which distributes stout beer in Singapore and Malaysia, handing Heineken full ownership.

"Having greater commercial control in the important regions of South-East Asia and the Caribbean will allow us to maximize the strong potential of our brands in these growth markets," Heineken Chief Executive Officer and Chairman Jean-François van Boxmeer said.

At the same time, Diageo acquired Heineken's 20% stake in Guinness Ghana Breweries Ltd., increasing its share holding to 72.4%.

The companies have struck licensing agreements for the beer brands involved in Jamaica and Ghana.

The transaction "provides a strong route to consumer for Guinness which will grow the brand in these markets," Diageo Chief Executive Officer Ivan Menezes said.

Diageo will receive a net payment of $780.5 million in cash, which it will use to pay down debt, and record an exceptional profit of around GBP440 million after tax.

Write to Ed Ballard at [e-mail]

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(END) Dow Jones Newswires

October 07, 2015 02:56 ET (06:56 GMT)

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