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Diageo takes control of United National Breweries

Diageo has taken control of South Africa’s United National Breweries (UNB), having acquired the remaining 50% stake it did not already own.

UNB makes a traditional form of African beer known as sorghum and is the biggest brewery of its kind in South Africa. Diageo paid $22m (£14.8m) to buy the remaining 50% stake of UNB from Pestello Investments Inc, a company affiliated to Diageo CEO Vijay Mallya.

It also agreed to pay a further  $14 million (£9.4 million) should the group meet future earnings targets.

Earlier this year, research by Candean showed Africa’s beer industry to be the fastest growing in the world, predicting an annual average growth rate of 5% between 2013 and 2017. This outstripped the expanding Asian and Latin American markets, which are projected to grow 4% and 3% respectively. Research pointed toward a trend among African consumers trading up to commercial beers and more premium products, away from home-brewed beers.

The transaction, subject to consent from the South African competition authority, is expected to complete in this fiscal year.

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