Johnnie Walker to buy Distell?

Intriguing suggestion yesterday from Marvin Shanken, publisher of Wine Spectator. “Talk of a union between Diageo and SABMiller follows weeks of speculation that A-B InBev has been exploring an acquisition of SABMiller that would bring together the world’s two biggest brewers. A union between SABMiller and Diageo, meanwhile, would create a £100 billion ($170b) drinks behemoth that would generate an estimated £5 billion ($8.5b) in yearly pre-dividend free cash flow. The combined company would have the world’s strongest premium drinks portfolio, and while A-B InBev would still be the biggest brewer in terms of global volume, a Diageo-SABMiller combination’s strength in emerging markets would be unmatched—especially in Africa, one of the world’s most promising beer markets. SABMiller is a dominant force in South Africa and is aggressively expanding across the continent, while Nigeria is the biggest export market for Diageo’s Guinness.”

marv1

SABMiller owns 30% of Distell so any Diageo/SABMiller corporate nuptials would have huge ramifications on the local drinks scene. Marv probably knows more than most as he’s close to the largest shareholder in Distell, Johann Rupert. That the new CEO of Distell, Richard Rushton, is ex SABMiller, adds fuel to the fire.

Distell shares closed up 3% on the JSE yesterday.