Diageo sells stakes in two brewers to Heineken for US$780.5m

Diageo, the world’s largest spirits company, said it had sold its stakes in Jamaican brewer Desnoes & Geddes (D&G) and GAPL, the majority owner of Malaysia’s Guinness Anchor, to Heineken for US$780.5 million.

The transaction also includes Diageo’s acquisition of a 20 per cent stake in Guinness Ghana Breweries from the Dutch brewer, raising Diageo’s total stake in Guinness Ghana to 72.42 per cent.

The maker of Smirnoff vodka, Guinness beer and Johnnie Walker whisky said the deal with Heineken would increase the companies’ focus in beer businesses in Jamaica, Malaysia, Singapore and Ghana.

Diageo sold its 57.87 per cent stake in D&G, the maker of Red Stripe beer, and its 49.99 per cent stake in GAPL to Heineken, the companies said yesterday.

Diageo said the deals would result in an exceptional profit after tax of about £440 million (HK$5.18 billion).

The company generates one-fifth of its revenue from beer, mostly the Guinness brand, which is growing more slowly than spirits. Despite the weak performance, Diageo often says the business is critical, since it gives it a route to market in Africa, making it easier to sell its spirits such as Johnnie Walker whisky.