Diageo to form JV for South African beer business

Alcoholic beverages company Diageo has reached an agreement to form a 50:50 joint venture in respect of United National Breweries' traditional sorghum beer business in South Africa.

The FTSE-100 listed drinks company stated that it had reached an agreement with Dr Mallya, an investor, to enter into a memorandum of understanding under which both parties would form the joint venture.

In addition to announcing its joint venture, Diageo stated that it had entered into an agreement to acquire a 50% interest in the company which owns United National Breweries' sorghum beer business. It stated that the remaining 50% would be held by a company affiliated with Dr Mallya.

Diageo is to acquire its 50% interest for $36m (approximately £23m), subject to customary adjustments.

The transaction, which is conditional on both parties receiving consent from the South african competition authority, is expected to be completed in the first half of the year.

MF