LONDON—Diageo PLC said it would terminate its partnership with Heineken NV in South Africa, as the world's largest spirits maker moves to wield more control over an increasingly important market.

The London-headquartered maker of Smirnoff vodka and Johnnie Walker whiskey on Tuesday said it had agreed to restructure its South African and Namibian joint venture with Heineken and Namibia Breweries Ltd., ahead of a previously agreed 2018 termination date.

"We now believe that Diageo has the necessary scale to move to the next stage of growth," said Diageo Chief Executive Ivan Menezes.

Diageo and its partners set up a combined company in 2004 to sell their combined portfolio of beer, cider and ready-to-drink products, in a bid to compete with behemoths Anheuser-Busch InBev NV and SABMiller PLC, the world's two largest brewers.

Diageo housed its spirits brands separately, but marketed these through an entity set up as part of the joint venture.

The company on Tuesday said it would sell its 42.25% stake in the entity that held the combined portfolios of Diageo, Heineken and Namibia Breweries, as well as its 15% stake in Namibia and its 25% stake in a brewery in Gauteng.

Diageo will buy the remaining stake in the marketing unit, headed by Jeff Milliken, who will become head of Diageo in South Africa once the deal gets regulatory approval, expected this year.

Diageo will continue to make ready-to-drink products out of its wholly-owned facility in Durban, while Heineken will brew Guinness for bottled distribution under a license. Diageo plans to continue importing canned Guinness.

Under the terms of the agreement, Diageo will get £ 128 million ($200 million) in cash. Mr. Milliken said the deal will be neutral to per-share earnings and cost.

Diageo's market share in spirits has jumped to 40% from 26% over the past nine years, according to the company, which said South Africa is its fifth-largest spirits market by volume.

Heineken declined to make market share data by country available, but Nomura analyst Edward Mundy said the brewer has recently lost share in South Africa, in particular with Amstel Light.

The Dutch beer maker will strike a new joint venture in South Africa with Namibia Breweries, which the company said will be fully focused on developing the beer portfolio and allow Heineken more commercial control of its key brands in South Africa.

Africa represents an opportunity for Diageo, which has been struggling with sluggish revenue growth in North America, its largest market. The company has told investors that between 2013 and 2017, the South Africa liquor market is projected to grow by 45% to $2.39 billion.

Tuesday's move, said Mr. Mundy, might "encourage thinking that the company could sell or spin off beer as a whole" in Africa. However he insisted that beer was essential for Diageo's growth, noting that South Africa can't be compared with the rest of the continent, where beer is far more developed than spirits.

"Beer gives you a strong footprint to be able to springboard off into developing a bigger spirits portfolio," Mr. Mundy said.

South Africa's economy has struggled as frequent blackouts and labor turmoil have pulled business and consumer confidence to near 15-year lows. Mr. Milliken said the market is tough but that the top-end of Diageo's spirits portfolio is growing over 20%.

Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com

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