Diageo is moving to take full control of the JV

Diageo is moving to take full control of the JV

Diageo has agreed a deal to take full control of UB Group's South African sorghum beer business, United National Breweries (UNB).

The London-headquartered firm acquired an initial 50% stake in UNB in early 2013 off the back its move for Vijay Mallya's UB Group-owned United Spirits. Diageo said today it has reached an agreement to buy the remaining 50% of the brewer from Pestello Investments, a company affiliated to Mallya.

The Guinness producer will pay an initial US$22m, plus a potential "earn-out" payment of up to $14m, dependent on UNB's performance. UNB, whose brands include Chibuku and Leopard Special, operates four breweries across South Africa.

The deal remains subject to regulatory approval, including scrutiny from South Africa's competition authority. However, Diageo said it expects the transaction to complete by the end of June.

Diageo already operates a cost-sharing JV in South Africa, Brandhouse Beverages, with Heineken and Namibia Breweries. Brandhouse is a marketing, sales and distribution company for premium alcohol beverages in the country. Heineken and Diageo also jointly own a brewery in Sedibeng, near Johannesburg.

Research published last month predicted that the continent of Africa is poised to become the world's fastest-growing global beer market.