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 is subject to regulatory approval and expected to close in the second-half of 2019.

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 Chairman of United Spirits, Vijay Mallya.

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