Welcome to today's Heineken conference call. My name is Jordan, and I'll be coordinating your call today. If you'd like to register a question, you may do so by pressing star, followed by one on your telephone keypad. Although we would ask all participants to please limit themselves to two questions each. I'm now gonna hand over to Dolf van den Brink, CEO and Chairman of the Executive Board to begin. Dolf, please go ahead. Thank you, and good morning, good afternoon, good evening, wherever you may be on the planet. It was a long time in the making, as some of you have, I'm sure picked up over the last month, but we are very happy to announce today that we intend to acquire control of Distell and Namibia Breweries to create a regional beverage champion for Southern Africa. On that first slide, we will go into detail on each of the components that we will be putting together three incredible and proud and successful companies, each in their own right. Distell, the leading African cider flavored alcoholic beverages wine and spirit player. Heineken, of course, with our long presence on the continent over 100 years, been over the last 10 years with a lot of momentum, particularly in premium beer in South Africa, and Namibia Breweries, the market leader in Namibia. In what follows, I will go into much greater detail on each of these parts. After I end, I will hand over to Harold, who will go in more detail on the deal summary and the financial effects. Onto the next slide, please. The strategic rationale. As I think you know, Heineken, we always first and foremost aim to be a growth company. Pre-COVID, we took great pride in always performing in the top quartile of volume and revenue growth. That remains our top priority as part of EverGreen going forward. Now, growth is often the product of two things. One is great brands, strong portfolio, amazing brand health, strong innovation on one side, and on the other side, of course, your geographical footprint and gaining exposure to good demographics. The beauty of this transaction would be that it delivers on both, growth pillars. Clearly from a geographical point of view, it would significantly strengthen our position in the South African market, where it will help both on our beer business, but it will give us access to very attractive other alcoholic categories. It will allow us to consolidate our position in Namibia, and then there's further optionality and opportunity around Southern and Eastern Africa. Both category portfolio innovation opportunities as well as geographical footprint opportunities and, behind all that, of course, significant synergies whereby we see both cost synergies and revenue synergies. On to the next slide. I will be short on this. You know Heineken as a major player in Africa. As said, we have been operating on the continent for over 100 years. Many of our senior execs have personal direct experience operating on the continents, including myself. We do believe in the long-term potential, that it's probably globally the most attractive place from a population growth from a demographics point of view, young population, still ongoing urbanization, ongoing emergence of the middle class, and consequently, the whole premiumization, as we have seen it in other places like in Asia, like in Brazil, still is in its early stages across the continent. On top of that, I may say, there is a huge opportunity with our female consumers as well, which we still are below fair share, I would say, even below what you would see globally. Now, moving on to South Africa proper, the largest market in Africa, the biggest profit pool representing over a fifth of the profit pool in Africa. Highly resilient. Of course, in general, Africa is somewhat more volatile. We know how to navigate that. We have done it for a long time, but it is also resilient. As you can see on the left-hand side of the graph, the total alcohol consumption has been very resilient, almost unrelated to economic growth. Yes, per capita consumption is relatively higher in South Africa than other places in Africa, but we still see further growth opportunities. Still, almost a quarter of the business is illicit alcohol. We have seen that pop up again during the COVID lockdowns. We still believe that we can convert that into the formal category. On top of that, we really believe there's still good opportunities with rising consumer penetration, with underserved consumer segments like female consumers and further premium opportunities. That's high level on the South African market. On the next slide as to the specific position of Heineken and Distell put together, we would create a very strong number two in total alcoholic beverages. On the left side you see a little bit our trajectory in the South African market. As you may recall, at around 2010, we started operations into what up to that point was in essence in a monopoly market. We commissioned the Sedibeng Brewery originally with 3 million hectoliters. We took back the Amstel brand. Heineken was very small at that time, and we started growing. At around 2015, we restructured operations, and we had a partnership with Diageo and Brand House before. From 2015, we were able to consolidate and become masters of our own destiny. We also extended the Sedibeng Brewery to 4.5 million hectoliters at the time, and that basically unlocked very rapid growth particularly in premium led by the Heineken brand, arguably one of the strongest, if not the strongest brands in brand power in the South African market. At the cusp of COVID and during the first lockdowns, we were actually able to extend our capacity to now 7.5 million hectoliters. That's a little bit the trajectory we have been on as a company over this last decade. In the meantime, Distell is an incredibly impressive operation. This is not an undermanaged asset. This is a highly successful, highly innovative company, has shown high single digits revenue growth persistently, consistently over time. Very good balance between volume and revenue per hectoliter. Very strong growth across different categories and both in South Africa and their more emerging markets across Southern and Eastern Africa. And the more we got to know the Distell team, the more impressed we were. Now, if you then indeed look at what this combined portfolio would look like in South Africa, it looks like this. We would have the number two play in beer and the number one play in premium beer. We would be by far the leading market player in cider and flavored alcoholic beverages. This is actually the bulk of the Distell business is actually cider and flavored malt beverages. With all the trends on taste and flavor, innovation beyond beer, fourth category, whatever name you want to put to it, Distell was really at the forefront of it. The U.S. has received the bulk of the visibility on this, but Distell actually quietly has been leading this in South Africa for the last years or so. The number one position in wine, and I will go a bit more in detail on that, and the number two position in spirits, predominantly mainstream spirits. Combined with this entity would hold almost a quarter of the total alcoholic beverage market with over 85% in beer, cider and flavored malt beverages as a percentage of the total, volume of this new entity. Zooming in a little bit on each of these four segments. I've already spoken about beer, the huge acceleration we have seen the last five years. By 2019, we ran into capacity constraints. They have now been resolved very recently, and we believe on the right side. There is now, with that capacity coming on stream, there is a lot of further potential on the beer side. Our conversion of brand power to market share, there's still a big gap. Of course a very important rationale of the transaction is to strengthen the route to market to give our beer portfolio more punch. We do believe there's still a lot of headroom. We are at about 16%-17% share in beer, and we believe that that can grow further. On to the cider and flavored alcoholic beverage portfolio. This is the core, this is the heart of Distell. I really believe they are one of the leading, if not the leading players in this globally. Two very powerful cider brands. The Savanna brand, super strong brand power, rated number one, actually already exported to tens and tens of countries across Africa and even beyond. It even earned the statistic of being the world's fastest growing cider brand. Hunter's, the historic brand ranks number two in the market, still a phenomenal presence in that market. We, Heineken, as the global market leader in cider, we can really appreciate what Distell has done in the cider space, also really making the category attractive to a multi-gender category, which is where it had not been historically. On the right side, the flavored alcoholic beverages, this is where the innovation is. There's a lot of movement here from a flavor taste, innovation capability competence, very impressive what Distell has built. Brands like Bernini, brands like Esprit. They were the first mover with the hard seltzers. They brought the first zero alcohol cider to the market. This is one of the key reasons why we are and have been so interested in pursuing this partnership with Distell. Now on to wine, which is traditionally further from our core business. We really learned a lot. It's impressive what Distell has done, where wine traditionally has been a minuscule category in Africa, inaccessible in price and taste and positioning. Distell has made it much less intimidating, much more accessible. They've reimagined what wine could be for the mainstream African consumer. 4th Street is an absolute powerhouse. It is a wine I have not seen anywhere else on the planet. It's lower ABV, 8%, more flavorful, sweeter taste. Comes in much more accessible packaging like bag-in-box and cans, rather than just the wine bottles as we know it. They even changed the drinking ritual. People drink it on ice with fruit. This is a very different thing from the mental model that we typically would have of a 75 cl green bottle from the Bordeaux. As such, it sits actually much closer than you intuitively would think to our core business of beer and ciders. Also, the way they have built this, because wine historically, globally, has not been a very attractive business because it's so asset intensive. The model as Distell has built it is actually very asset light. Only 2% of the grapes are coming from owned farms. In essence, they procure the grapes from the open market through long-term agreements, again, making this asset light and as such, interesting and very different from how you would know wine from a global point of view. Of course, spirits. On spirits, the premium spirits, the Scottish whisky based in the U.K. will be left out of the deal. That will go to an out-of-scope vehicle, Capevin, to be potentially spin off from the business. For us, it's really about those mainstream spirits that would be retained in the Newco going forward. Probably the most well-known brand is Amarula. The number two cream liqueur in the world behind Baileys, actually being sold in many, many markets. Maybe the most famous African origin brand in the world. There is the number two gin brand in the market, Old Buck. A very strong position in brandy and whiskeys with brands like Klipdrift, Richelieu, Viceroy. In whiskeys with Three Ships and Bain's Cape Mountain, and an emerging position with vodka innovations under the Count Pushkin premium brand. Now, typically, people may ask, why are you interested in this part of the business? For us, it's really contextual as well. In the South African market, the outlet footprint and the route to market, the route to market chain, almost completely overlaps between beer, ciders, wine, and spirits. There are significant economies of scale and reach by having this on the same truck and handled through the same route to market. Those are a couple of comments on that. Last one, on that, route to market, this is another part that we felt extremely appealing in this transaction. Distell has built a very strong route to market with high granularity and a much wider reach. We estimate that we, as a beer portfolio, will benefit by around 25% more outlets. We can improve our customer service levels by increased frequency. We can offer a much greater selection, and in that way add customer service and we can optimize our dual route to market, and optimize utilization rates and overlap. Distell has over 24 of these forward trade expresses all over the country, including in parts of the country where we're really underserved, underrepresented, and around 15 large distribution centers as well as in Namibia. This is really one of the key strategic assets of Distell. Now moving on to Namibia. This is a business that we have known well for a long time. We have been a minority shareholder for many years. We have the utmost respect for our partner in that market who as a family business like us, has nurtured and grown this business over time. As [uncertain] wrote in the press release, for them, the time has come to hand it over and let it go into the larger world as he believes that we can unlock more value than they would be able to do standalone. Once again, with the utmost respect for what the family and that company has built over those many years, there's the potential of ultimately merging Namibia Breweries together with the Distell operations in Namibia. There may be synergies, or for sure there will be synergies there, both cost and revenue synergies. On the NBL business proper, there are good cost synergies simply from leveraging global procurement and productivity improvements. The last one, the kind of the third leg, if you like, of this transaction beyond South Africa and Namibia are a footprint of countries in Southern Africa and Eastern Africa, where we traditionally have been rather small and underrepresented with small export organizations focusing on the Heineken brand. Distell has had more success, fast growth with their operations centers around their cider and wine portfolio across these markets. We believe by combining our efforts in these markets, we have a much higher probability of success and capturing upside in some of these countries that are highly attractive. Again, it is kind of secondary to the strategic importance of South Africa and Namibia. The last message and important for me to share that as we got to know the various companies and management teams, we clearly share strong common values with Distell and Remgro, the leading shareholder in Distell. Same counts for the NBL team. We are all in it for the long term. We are growth companies. We invest for the future. We invest in local employment and talent development. I think as Heineken, we have a very good track record in case of large M&A in retaining top talent in the local markets, and that's something for sure that we indeed will want to do again. It is clearly, when it comes to South Africa, a clear commitment to have positive impact in South Africa. We realize it's very important to contribute to a Broad-Based Black Economic Empowerment. We aim to enhance the ownership for Black Economic Empowerment up to 15%, and we will, you know, discuss and agree this in greater detail with the authorities in due time. Last, maybe relevant to mention, is that the Newco, which will hold these, the three entities of Heineken South Africa, Distell and Namibia Breweries, will be headquartered in South Africa. I think that is all for now in what I would have to share and let me hand over to Harold here. Well, thank you very much, Dolf. Turning the page to slide number 16, just let me confirm that we see this transaction as generating very significant synergies. We're not going to disclose the detail of them, but they are in line with comparable end market transactions. Of course, as we start to establish already our continuous productivity program for a year and a half now, we will absolutely make sure that as soon as this becomes accessible, we will drive the learnings also in the South African entity. Now, what we do know is that there are multiple components, and Dolf has alluded to a couple of them, of synergies that we see. First and foremost, revenue. We are in the end a growth company, and we do see this as a fantastic opportunity to enhance the competitive positioning across Southern Africa with a much broader portfolio that is really servicing as well for the long term. Very frankly, we also are admiring the strength of the management in creating that revenue. We're building a strong number two position in South Africa, but as Dolf just alluded to, we're also very keen to leverage the full extent of the enhanced route to consumer that we see by folding this together. The cost synergies are also significant, and Heineken has a significant track record in delivering big cost synergies. More importantly, we would look to integrate the enlarged business, as I said, in the continuous cost productivity program. We see scale benefits, including procurement and supplier contracts. We see production benefits, for example, from moving our cider production from Sedibeng to Springs, which is a Distell's own brewery, and so that we can free up further beer capacity to support further growth. We do see significant logistics spend opportunities as we start to harmonize across depots, our primary and secondary transportation. There are significant marketing spend efficiencies, both in terms of cooler footprint, optimizing trade and promotional expenditure as we start to combine the outlet coverage. The support cost efficiencies are there to be achieved through a combination of personnel, non-personnel, but also indirect procurement, IT charges, and office rental opportunities. Now, let me just hasten to say that we don't have a predetermined idea of what the location strategy will be for Southern Africa. We will do that in due course because we're very mindful that we actually want to retain talent. As we alluded to, this is a very significant asset that we want to maintain. Turning to page 17 to talk a little bit about the transaction structure. Heineken will incorporate the NewCo, as it is currently called, which will be an unlisted company in South Africa. The transaction will be implemented through a number of simultaneous and inter-conditional steps, which will result in a cash payout for Heineken of circa EUR 1.3 billion. Firstly, we're putting out a recommended offer by Heineken for Distell, and that is twofold. The in-scope assets, which are the cider, FABs, flavored alcoholic beverages, wine and spirits businesses, which will be integrated into NewCo. This represents about 90% of Distell's valuation. We've also made an offer for out-of-scope assets, as we call them, which are the remaining assets of Distell, including their international Scotch whisky business. Heineken here will have minority stake in this business, which is called Capevin. Dolf alluded to that, which remains controlled by Remgro. The offer for Distell is subject to the usual shareholders approvals. Now, we have expressions of support for the transactions for shareholders representing about 56% of the votes in Distell. NBL holds 25% in Heineken South Africa, and one of the interconditional steps to a proposed acquisition is this stake of NBL. NBL is a listed company in Namibia, and therefore it will require shareholder approval. It is worth noting, also subject to shareholder approval, that as Dolf mentioned, there is potential for NBL to acquire Distell Namibia to further unlock synergies. As a reminder, Heineken already owns close to 30% in NBL through a joint venture with Old Mutual Brand List. Heineken will seek to acquire Ohlthaver & List 50% and a little bit interest in the joint venture, which will effectively result in a controlling stake, controlling shareholder in NBL of close to 60%. Now, after completion of all of these deals, Heineken will contribute these acquired assets to NewCo, plus 75% of the directly owned shareholding in Heineken South Africa and certain fully owned export operations in Africa like Kenya, Tanzania and Uganda. For a total investment of EUR 2.5 billion, including the cash payout and the contribution in kind of both businesses, Heineken will own a minimum of 65% in NewCo, with the remainder owned by Distell investors that elect to remain invested in this unlisted vehicle. Turning over to the financial effects and the next steps for Heineken. For us, this is an important growth but also value creation opportunity, because NewCo will be a top five operating company for Heineken. We expect earnings per share, BEIA, to be accretive within the first-year post completion, and expect them to be margin accretive in the medium term. Because as we just outlined, we do see very significant revenue and cost synergies. The pro forma net debt, EBITDA ratio is expected to increase just marginally, and we remain committed to the long-term target of below 2.5x. That remains unchanged. Now, the next steps are that obviously we first need to get a customary and applicable regulatory and shareholder approvals, and completion is subject to that. We do expect that this transaction will be completed during the course of 2022, of course, when necessary approvals are obtained. Further announcements will be made as and when appropriate. With that, we really look forward to welcoming Distell and NBL colleagues into our newly created South African beverage champion. For now, it remains business as usual. With that, we're open to your questions. Perfect timing. Exactly 30 minutes. We have 30 minutes left for questions. The floor is yours. As a reminder, if you'd like to register a question, please press star followed by one on your telephone keypad. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your phone is unmuted locally. As a reminder, we would ask all participants to limit themselves to two questions each. Our first question comes from Tristan van Strien of Redburn Partners. Tristan, the line is yours. Hi. Good afternoon, Dolf and Harold. Congratulations getting this very complicated deal over the line so far. So yes, just two questions. One, just the broader implications on Heineken going into spirits and more importantly, this asset light wine model. Can you maybe just expand on that? Like what is the opportunity in the emerging markets, especially when I look at a brand like 4th Street, not just in Africa, but also in the other EMs in Asia and Latin America. How do you think about that? And maybe just related to that, my second question, I understand the need for the mainstream spirits in South Africa, but you've also decided to keep brands like Amarula in scope rather than put it in the out-of-scope bucket. You know, look at Amarula, which is two-thirds to three-quarters outside of Africa. Can we expect your Brazilian operations to be selling Amarula, for example? Thank you, Tristan. I realize this is a market that you know very well. I will be extra thoughtful in answering. Yes, by the way, it was a complicated process, as you can imagine, with all the different parties involved and crossholdings and what have you. Indeed, we took our time also to get to know each other much better. as the intent was to create a partnership so important that we would know the people we would be partnering with going forward. On 4th Street and the wine, I think it's a reflection of what our intention is with EverGreen, to become more consumer and customer-centric, to become more open and less agnostic, you know, as to what are the particular boundaries of categories and subcategories. I'm very inspired by what Distell has done with wine. They broke the mold of, you know, how people would look at wine and reimagined it completely in an environment where anybody else would have said, "You can't sell wine." From a culture, from a capability point of view, and indeed from a portfolio point of view, this is very interesting what this could imply across our footprint in Africa, and maybe beyond. First, though, we will focus on these markets and on integrating and on learning and, you know, accelerating the portfolio as is accelerating beer. It is a key part of the rationale, this consumer centricity, this innovation capability of Distell, the multi-category nature of the business, makes it very compelling, and to your point, is relevant beyond the geographical boundaries of this particular partnership. Mainstream spirit South Africa, I commented on it. Indeed, for now, we feel that there's logic and that's why we retain it. Amarula, we will see. The South African markets and those export markets across Southern and Eastern Africa are quite, Amarula is a quite important vehicle, and that's why we like the optionality of having it, and then we can always see with time if we would change our view or or not. For now, we are committed to keep it within the portfolio. Okay. Thanks. It's really getting your school fees in the category more than anything else. It allows you to do that. Thank you, Tristan. Thank you. Our next question comes from Edward Mundy of Jefferies. Edward, the line is yours. Afternoon, Dolf. Afternoon, Harold. Two questions, please. On slide seven, I think you showed that growth stalled during the Brand House period within South Africa. Can you talk about some of the key differences with this transaction related to Brand House, particularly on governance and portfolio? My second question is, look, I appreciate that you're not gonna guide on synergies at this stage, but you are talking about this business being margin accretive. Is that margin accretive to the 2020 depressed Heineken group margin of about 12%, or is that margin accretive to the historical margin that was close to 17%? Very good. Thanks, Ed. Let me take the first part, and then Harold can maybe comment on the synergies. Ed, to your question, slide seven was that slide with kind of our momentum over the last decade in the South African beer market. I think that's the slide you referred to, and that inflection point around 2015 when we kind of became masters of our own destiny. Brand House, yeah, it's now a long time ago, and I had to look it up myself, as well. It was a rather complex structure where we had the majority of the production company of the City Brewery, but actually on the route to market part, we had a minority, and Diageo was clearly in the lead. At that point in time, the beer market share was very nascent, very immature. It was just a handful of a couple percent of market share. Diageo, having control of the distribution company, understandably prioritizing the spirit component of the total portfolio. That didn't work out well, particularly with the maturity level that the beer portfolio was at that moment in time. Now, indeed, when we got control, we were able to unlock the potential much more efficiently, and we got it up to 16%-17%. What's different is that in this new partnership, in this new merged entity, we as Heineken will be fully in control and we will manage the portfolio in a way that we feel will unlock most value. As such, it's a very different sort of setup and much more clear cut. The decision lines will be quite clear compared to the multi-party setup of the Brand House deal at the time. Let me hand over to Harold on the synergies. You'll be pleased to know, Ed, thanks for the question, that we really are looking forward and restoring the margins of Heineken to the 17% by 2023 that we've guided on. Therefore, when we're talking about margin accretion over the medium term, we're actually looking at the 17% range and not the anomaly that we had in 2020. Very good. Very clear. Dolf, just to go back to the first question. Given the portfolio is a little bit more mainstream, i.e. the non-beer and cider portfolio here is a bit more mainstream, would you say there's more commonality there with your beer and cider business as well, relative to, let's say, Brand H ouse? Yes, absolutely. Edward, that mainstream wine, 4th Street, the overlap with the beer footprint in the taverns is almost identical. Indeed, the nature of it being mainstream makes that overlap, and therefore the route to market synergies are very high. If it would be very premium, it would have been less so. Again, that's why we decided on that more international premium Scotch whisky business to keep that out of scope. Great. Thank you. Our next question comes from Sanjeet Aujla of Credit Suisse. Sanjeet, please go ahead. Yes, good afternoon, Dolf, Harold. Two from me, please. Firstly, can you just talk a little bit about your most recent performance in South Africa? I think Distell is already operating well ahead of pre-pandemic levels. I think you're a bit below. Can you just talk about some of that recent underperformance? Just going back to cost synergies, appreciate you're not guiding specifically on this transaction, but can you just give us a feel for previous in-market transactions you've done, what level of synergies have been achieved at the potential sales? Thank you. Yeah. Thank you, Sanjeet. Again, let me take the first part and Harold the second part. The performance in South Africa, I'm doing it quickly from the top of my head. I think we were up in the 40%-50% range, cycling, of course, the lockdowns of last year. As such, it's a bit harder to see through the numbers. In the meantime, we have been working hard on the brewery to extend the capacity to 7.5 million hectoliters, as I commented on before. So, there's a bit ups and downs. I think we are still slightly below 2019 levels, but pretty confident that, fingers crossed, bar any new alcohol bans, that we should be in a very good place to resume the momentum that we had prior to the pandemic. But this year, very, very good momentum, and we're gaining back the market share that we were losing last year. Harold, on the synergies. Yeah. On the synergies, Sanjeet, you'll appreciate that we're not going to be too precise about the synergies at this moment in time. What we are going to say is that we are expecting the synergies to materialize over the medium term, so three-five years. Please give us some time to get really our hands around the business. We do also have a strong record or a track record of delivery. If you take Kirin in Brazil, for instance, I think we've done an outstanding job extracting synergies from that deal. Now get to the numbers. Previously, in some of the publications that were floating today, people said, "Look, we are expecting about 10% of expected revenues as synergies." That is really the ballpark that we're targeting about here. Very good. I just You're more disciplined than I am because I already said that in the press as well. Oh, okay. I think that ballpark 10%-11% makes sense. Just to clarify on that 10%-11%, is that on the Newco sales or is that on Distell and Namibian specifically? No, it's 10% of the revenue of the acquired business. Got it. Very clear. Thank you. Thanks, Sanjeet. Our next question comes from Olivier Nicolaï of Goldman Sachs. Olivier, please go ahead. Hi, good afternoon, Dolf. Afternoon, Harold. Just one question, actually. You have about 17% market share in South Africa, and despite obviously a weaker distribution in the South. Now, after the deal, as you said, distribution is going to be much better. Can you give us an idea perhaps of your market share in your strongest region, like Joburg today, and if it could be a good proxy for what your market share could look like in medium term for the rest of the country? Thanks, Olivier. Good question, but I'd rather not go into that specificity for various reasons. The way we frame it on slide nine, when you look at our brand power, brand power to market share conversion, there's huge upsides, which indeed we believe is a reflection that our route to market and our particular reach in outlets have been insufficient standalone. We do believe our ability to close or to convert brand power to market share will significantly go up. We rather don't make any forward-leaning specific statements on that, Olivier. Oh, very clear. Thank you. Understood. Thank you. Thanks. Our next question comes from Richard Withagen of Kepler. Richard, please go ahead. Yes, good afternoon now. Thanks for the question. I have two questions, please. First of all, on the complementarity of the route to market, obviously you mentioned that as a key pillar of the transactions. Can you maybe give some details on, you know, the number of outlets served, the number of people in regions, you know, where. Just to give some meat on the bone in terms of how complementary this deal is. The second question is, can you give us your thoughts on the advantages and disadvantages of a structure with minority shareholders? Okay. Let me start on that second part, Richard, and thanks for your questions. Beer and alcoholic beverages for that matter are still a very local business. As you know, Heineken, in many markets, we work with a very strong local minority shareholders, which sometimes is complex, but we really believe the benefit outweighs the disadvantages. We are very proud, for example, of SABECO, our minority partner in Vietnam, who has been very fundamental in the phenomenal success that we have had over the years in that market. There are many examples along those lines. In a market like South Africa, which you know, from a social, economic, political point of view, is complex, not always easy to navigate, we really feel there's a big benefit to having a well-connected professional minorities. As we get to know Remgro, we really hope that indeed they will choose to reinvest in Newco. We have the utmost respect for them as businessmen, as entrepreneurs, as operators. What they've done with Distell you know, supporting Distell management is nothing but very impressive. It's also a way to manage our balance sheet and keep optionality going forward. That's also to do with capital allocation across different geographies, different regions. Net-net, we are very happy where this seems to be heading. What's very important to us that we would have a strong majority with full control, consolidation, management control, what have you. As such, the setup as proposed is completely in line with what we would hope for. Maybe if I can just chip in here on the route to market synergies that we see. As we say on slide number 12, we're expecting to expand the route to market by combining them to cover at least a 25% incremental outlets reach. Now, just to contextualize that, Distell is covering about 22,000 outlets here. You can see that this is actually quite a significant number that we're hoping to get from combining the forces. Very good. Thanks, Dolf. Thanks, Harold. Sure. Our next question comes from Mitch Collett of Deutsche Bank. Mitch, please go ahead. Hi, Dolf. Hi, Harold. I've also got two questions. I appreciate we can get revenue, EBITDA, EBIT for Distell, but given that there are a few changes in the perimeter, I wondered if you could give us revenue, EBITDA, EBIT for the parts you're retaining, and also whether you could give us the same figures for Heineken South Africa. I appreciate that COVID maybe makes that a bit more complicated, so ideally 2019. My second question is, are you able to say what currency you're going to borrow in to fund the transaction, and therefore what cost of debt finance you're expecting? Thank you. Very good. Thank you, Mitch. I think these are good questions for Harold. Mitch, you're effectively asking a breakdown of the numbers between Heineken South Africa and Distell, and then trying to convert that to a common taxonomy in terms of accounting principles applied. We've clearly done our homework, but I don't think that we're at the right place or time to go into that level of granularity and giving you that level of disclosure. You'll have to make do with the numbers that we've provided you in the announcement, unfortunately. The second one is the impact, I think it was not the currency, it was the- The currency of the financing. Of the financing. We're still working through that, because there are a number of options. Look, we've got the financing in place, but we're still finalizing on the right mix between South African and hard currency financing that we're going to do. Needless to say that we don't think that this is going to be a material impact on how we look at operating margin or EPS accretion. Okay. Maybe if I can just come back on the first one. Can you maybe give us EBITDA or EBIT for the Newco, so not splitting out? I apologize if you've given that and I've missed it. No, I don't think we've given it, nor do we intend to give that. But basically what we're saying is that, you know, after synergies, this will be accretive to the group average that we're targeting, or the 2019 numbers as a combined entity. Again, you should be thinking about the 10% synergies from the acquired business should bring us in line with the margin guidance that we've given, that we envisioned for 2023 and beyond. Okay. Yes. Just on that first question, as we will get to the prospectus in the next couple of months, that will have that detail that you're looking for, but that will be probably early January. Okay. Understood. Thank you. Thanks, Mitch. Our next question comes from Trevor Stirling of Bernstein. Trevor, please go ahead. Hi, good afternoon, Dolf and Harold. Two quick questions from my side as well. If you look at the retained assets, Dolf, in terms, particularly in terms of wine, how much of those revenues are made inside South Africa and how much are exports? Specifically looking at the domestic wine business, you highlighted the 4th Street brand, but how significant is that as a percentage of volumes of revenue of the domestic sales? You said you had two questions. Yes. Those are the two. You know, that's the split between international and domestic on the wine, and then inside the domestic, how significant is 4th Street today? I appreciate a lot of potential, but is it a significant contributor already? Very good. I think the wine part of the international business is rather small and a very early stage, I would say. The wine business is predominantly in South Africa and probably in Namibia. Beyond that, I think it's almost negligible. The 4th Street brand is the predominant brand. From the top of my mind, Federico, it's around 60% of the wine business, give or take. But please don't pin us on it, Trevor. I don't have that exact detail from the top of my mind. It is the brand that really interests us because it is such a different sort of proposition. You know, some may even argue, I wouldn't call it a wine. It is really in that blending of categories between wine, cider, and flavored alcoholic beverages, I would say. It just happens to be made from grapes. Super. Thank you very much, Dolf and Harold. Thanks, Trevor. Our next question comes from Laurence Whyatt of Barclays. Laurence, please go ahead. Afternoon, Dolf and Harold. Thanks very much for the questions too, from me as well, if that's okay. Firstly, on your digital capabilities, we've heard a lot about what you've got in elsewhere in the world that was very limited on digital in South Africa and Sub-Saharan Africa. I'm sure we'll hear from your big peer next month at the Capital Markets Day around digital expectations. I was wondering how big a part that will play for your performance in South Africa and the surrounding areas as we go forward. Secondly, on slide eight, you give us a split by volume. I was wondering if you've come up with similar numbers by value or if we should just divide by the ABV of each of those categories. Any sort of indication of split by value would be helpful. Thank you. Very good. Harold, if you can take that second part. On the digital, that will be important. I think both our companies are early in the maturity curve on that. I just returned from Mexico, for example, where we are really moving at lightning speed, very impressed by how we have been digitizing our route to market and getting to very high percentages with superior net promoter scores and then what have you. In South Africa, we have been very active. A couple of years ago, we bought an EPOS provider called TouchSides. We have thousands of EPOS systems in the market where we have the data that we can mine. Now we can extend that platform to the Distell business as well. From an EPOS point of view, I feel we're quite advanced. Actually, South Africa is our most advanced country, but digitizing the B2B component, a bit less immature. Yes, this deal would allow us to now very quickly ramping up in this regard, taking the learnings from Mexico and some other places and reapply them in this market. On that second question, over to Harold. Yeah. On the portfolio, we only have the Distell portfolio, the cider and the ready-to-drinks. The FABs are about 36%, and then the rest. That's great. Thank you very much. Sure. Thanks, Laurence. Our final question comes from Jeff Stent of Exane S.A. Jeff, please go ahead. Good afternoon. Just a quick question on returns, which I guess is a question for Harold. How do you think about the cost of capital on this investment, Harold, and when would you expect to recover that cost of capital? Thank you. Yeah. Hey, Jeff. Good to speak again. Obviously we do understand that Africa has a certain amount of volatility there. Clearly the cost of capital has been taken into account, and I can reassure you that the rate of returns that we see from this transaction are quite in excess of the weighted average cost of capital for South Africa or Southern Africa. Okay. Are you able to put any sort of timescale on that, when you expect to cross over? Well, as we said, year three will be accretive, but we're crossing over year two to three on that. Okay. That's great. Thank you, Harold. Sure. Thank you, Jeff. Operator, are there any questions left? We have no further questions on the phone lines. That's brilliant. With four minutes to spare. That's the first time. Thank you all for your interest. We are very excited about this transaction. Again, it was a long time in the making. We believe it's a very good growth and value-creating opportunity, fully in sync with our EverGreen strategy. We look forward to engage with the different shareholder groups and authorities to make sure we move to a closure as soon as possible. Thank you all for your interest, for now, and looking forward to speak soon. Have a great day. Bye-bye. Bye-bye. This concludes today's call. Thank you for joining. You may now disconnect your lines.