UPDATE 1-Heineken in talks to buy South African drink maker Distell

(Updates with Heineken statement)

JOHANNESBURG, May 18 (Reuters) – Heineken NV confirmed on Tuesday that it was in talks with South Africa’s Distell about a possible acquisition, in what would mark a push into wine and spirits for the world’s second-largest brewer.

Distell, whose market capitalisation was 31.8 billion rand ($2.27 billion) at the close on Monday, said in a statement it had been approached by Heineken regarding a potential acquisition of the majority of its business.

Distell is also the world’s second-largest cider maker, a business in which Heineken is heavily involved, chiefly through its Strongbow brand. Distell also makes wines and spirits, including Amarula and Two Oceans wines. Heineken already sells beer in South Africa.

Both companies said that discussions were ongoing and there was no certainty an agreement would be reached.

An acquisition would be the first for Heineken chief executive Dolf van den Brink, who took charge at the Dutch brewer last June and has launched a plan to restore profit margins, partly through cutting 8,000 jobs.

Distell shares jumped by as much as 10.4% in early trading on Tuesday to a four-year high of 158.00 rand. At 0745 GMT, they were up 4.5% at 149.54 rand. ($1 = 14.0305 rand)

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