Diageo has sold its shares in Desnoes & Geddes Limited and in Guinness Anchor Berhad to Heineken while also acquiring Heineken's shares in Guinness Ghana Breweries Limited, according to a press release issued by Diageo.
The transaction brings increased focus to each company's respective beer businesses in Jamaica, Malaysia, Singapore and Ghana.
Diageo said in the press release that they are selling their 57.87 percent shareholding in Desnoes & Geddes to Heineken.
This will increase Heineken's shareholding Desnoes & Geddes to 73.32 percent.
Heineken also bought Diageo's 49.99 percent shareholding in GAPL Pte Limited, according to the press release.
The transaction has given Heineken full ownership of GAPL, which owns 51 percent of Guinness Anchor Berhad.
Diageo adds in the press release that they will also be getting Heineken's 20 percent stake in Guinness Ghana Breweries.
The transaction increases Diageo's stake in Guinness Ghana Breweries to 72.42 percent.
Ivan Menezes, CEO of Diageo, said in the press release that the transaction enhances the company's "focus on the core to achieve Diageo's performance ambition."
"It provides a strong route to the consumer for Guinness which will grow the brand in these markets," Menezes said. "I am pleased that this transaction meets the clear strategic objectives of both Heineken and Diageo."
Bloomberg adds that Heineken have been restructuring control of its joint ventures.
This is due to transformative deals being harder to find in a market that is struggling from the decreasing demand of mainstream brands and weak North American consumption.
Richard Withagen, an analyst at Kepler Cheuvreux in Amsterdam, told Bloomberg that the deal with Diageo to take control of several businesses makes sense for Heineken.
"They are doing well," he said. "We'll see how long that continues, but they are doing well."
Diageo said in the press release that they will be receiving a net cash consideration of $780.5 million as payment for the transaction.
The company said they plan to use the cash to reduce its borrowings.
Diageo also said in the press release that they will have a long-term distribution agreement with Guinness Anchor Berhad and Desnoes & Geddes for the distributions of beer brands in Malaysia and Singapore, and in Jamaica, respectively.
Diageo will also be transferring its international distribution rights of the Red Stripe lager to Heineken.
