Distell share price: Potential acquisition by Heineken in the works
In the below article we look at recent news relating to a possible buyout of Distell by the global beverage conglomerate Heineken.
Distell Group Holdings potential acquisition
The wine, spirits and cider producer Distell has recently announced that the company is in talks with the world’s largest cider maker Heineken over a potential buyout of the majority of its business. In turn Distell currently trades under cautionary in lieu of the potential acquisition.
Heineken’s motivation for the talks appear to be for an expansion into the African continent. The acquisition if successful would organically and quickly grow the groups footprint into a number of key markets within the continent, including Nigeria, Kenya and Mozambique.
Should the talks result in the buyout, it is assumed that Distell assets which are not core to the Heineken model could be unbundled or disposed of. These assets include the wine and spirits businesses.
Remgro remains the a key player to the deal as the investment holding company maintains a more than 30% interest within the Distell business and controlling voting rights.
Distell Group Holdings: technical analysis
The share price of Distell has recovered from weakness seen through a hard COVID-19 induced lockdown, where alcohol sales were banned and restricted for a good portion of 2020. The recovery does however see the share price trading within a renewed longer term uptrend.
While the longer term uptrend remains in place, the nearer term picture shows the share price to have moved back into overbought territory. Trend followers might prefer to look for short term weakness from overbought territory before looking for long entry closer to gap support at around 14470. In this scenario a close below 136 might be used as a stop loss consideration for the trade.
It should be noted that trading a share whilst under cautionary carries an amplified degree of risk.
In Summary
- Distell Group Holdings and Heineken are in talks regarding a potential buyout
- Remgro continue to have a controlling voting interest in Distell
- There is a strong suggestion that non-core assets to the Heineken model could spun out should the buyout transpire
- Heineken is looking to the move as an opportunity to increase its footprint into the African continent
- The long term trend for Distell remains up, although the share price is overbought in the near term
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