Diageo has taken full control of South African beer business United National Breweries after buying out the other half of the company that it did not already own.
Diageo has purchased the final half of United National Breweries that it did not own and has paid $22m (£14.8m). The brewer has also agreed to pay a $14m in the future should the group meet future earnings targets specified in the transaction.
Diageo first invested in UNB two years ago, it paid $36m to buy half the company. The other half was then owned by Pestello Investments which is a group connected with tycoon Vijay Mallya.
United National Breweries makes a traditional form of African beer known as sorghum. It is also the biggest brewery of its kind in South Africa. The acquisition deal deal is conditional on approval from South African competition authorities. On the other hand Diageo, whose best-known brands include Guinness and Johnnie Walker whisky, has focused its expansion in South Africa and other emerging markets in recent years, such as breweries from China, Brazil, India and others. However, Diageo is now facing a slowdown in sales growth in the emerging markets, and these latest business efforts has forced chief executive Ivan Menezes to look for cost-cutting drives to make the company more versatile in the markets its operates in.
United National Breweries Vijay Mallya self-proclaimed “King of Good Times” fell on harder times after his entry to the airline industry was unsuccessful. Diageo took advantage of this situation as it moved in on the assets of Mr. Mallya. The UK group took majority control of Mr. Mallaya’s United Spirits business last year which is the creator of popular liquor brands such as McDowell’s.
According to Diageo: “Once completed, this transaction will give Diageo control of the leading traditional sorghum beer business in South Africa, including the ability to make investment decisions to support the continued growth of United National Breweries brands in the sorghum beer category.” The transaction is expected to complete within the current fiscal year.
Diageo plc is a British multinational alcoholic beverages company with headquarters in London, England. It is the world’s largest producer of spirits and a major producer of beer and wine. Diageo’s brands include Smirnoff, Johnnie Walker, Baileys and Guinness. Diageo also owns 34% of Moët Hennessy, which owns brands including Moët & Chandon, Veuve Clicquot and Hennessy. The company sells its products in over 180 countries and has offices in around 80 countries. Diageo has a primary listing on the London Stock Exchange and is a constituent of the FTSE 100 Index. It had a market capitalisation of approximately £48.9 billion as of 7 May 2013, making it the 8th-largest company on the London Stock Exchange. It has a secondary listing on the New York Stock Exchange. Diageo stock market evolution: http://finance.yahoo.com/q?s=DEO
About Ivan Menezes
Ivan Menezes is an Indian-born American/British business executive. He is the chief executive officer of Diageo. Menezes was born in Pune, Indiaand is the son of Manuel Menezes, who was the chairman of the Indian Railway Board. He was educated at St. Stephen’s College, Delhi and Indian Institute of Management Ahmedabad, and the US Kellogg School of Management. Menezes joined Diageo in 1997. He is also a non-executive director of the US-based fashion retailer Coach, Inc.
About United National Breweries
United National Breweries is the leading manufacturer of Traditional African Sorghum Beer in South Africa. It produces and distributes this kind of beer from 6 Breweries and numerous distribution depots situated throughout South Africa. UNB holds the major South African Umqombothi brands in its stable and is compelled to champion the cause of Umqombothi and strives to uphold the image of this amazing product in all of its endeavors.
About Vijay Mallya
Vijay Mallya is an Indian businessman and politician. He is the son of businessman Vittal Mallya, the chairman of the UB Group, an Indian conglomerate with interests in beverage alcohol, aviation infrastructure, real estate and fertilizer among others. Mallya is also a member of the Rajya Sabha, the upper house of the Parliament of India.
Mallya also owns several franchises. He also co-owns the Formula One team Sahara Force India. His major companies own Indian Premier League team Royal Challengers Bangalore, the I-League teams Mohun Bagan A.C. and East Bengal F.C. He is also a member of the World Motor Sport Council representing India in the FIA. Mallya is the Chairman of public companies both in India and the US. He has been the Chairman of Sanofi India (previously Hoechst AG and Aventis) as well as the force behind Bayer CropScience in India as chairman for over 20 years. In addition to being the Chairman of the mentioned companies, he is also the leader of several other companies.