Analyst Note
| Philip Gorham, CFA, FRM |Heineken confirmed it is to acquire South Africa's Distell in a series of transactions that will give it greater control over some of its assets in Africa. Heineken will pay EUR 1.3 billion in cash for the remaining equity of Distell and Namibia Breweries, or NBL, it does not already own, and will contribute its existing export and South African assets into a new Southern Africa drinks company, of which it will own at least 65%. In our opinion, Heineken has paid a reasonable price, and the deal is neutral to our EUR 84 per-share valuation. Strategically, we see some advantages, and we think there is modest upside to Heineken's structural organic growth rate and margin expansion opportunities.