Diageo takes full control of South African sorghum beer business

Guinness and Smirnoff maker Diageo is buying out its joint venture (JV) partner in a traditional sorghum beer business in South Africa.

The 50:50 JV, which owns the United National Breweries, was set up in January 2013 with Pestello Investments.

Diageo has now decided to acquire Pestello's 50% stake for an initial payment of $22m and a potential earn-out payment of up to $14m.

The deal, which requires consent from South African competition regulators, is expected to complete in the current fiscal year ending June 2015.

"Once completed, this transaction will give Diageo control of the leading traditional sorghum beer business in South Africa, including the ability to make investment decisions to support the continued growth of United National Breweries' brands in the sorghum beer category," the company said.