Johannesburg - SABMiller and Coca-Cola received approval from South Africa’s Competition Tribunal to proceed with a combination of the drinks companies’ bottling operations on the continent, ending an 18-month regulatory process.
The tie-up wasn’t contested at a hearing held on Monday in Pretoria, the Tribunal said in an emailed statement. That followed a May 4 agreement between the two international beverage makers and the South African government to protect jobs and set up two R400-million development funds to smooth the deal’s path.
Regulatory attention will now focus on Anheuser-Busch InBev’s effort to get approval for the takeover of London-based SABMiller, which has its roots in Johannesburg and is the country’s biggest brewer with lager brands such as Castle Lite. The Competition Commission said last week it may not be able to meet a deadline of May 12 to complete an investigation into the $106-billion deal due to “outstanding issues” it hasn’t identified.
AB InBev, based in Leuven, Belgium, has also agreed with the South African government to create a fund to support the country’s beer industry, committing R1 billion. The brewer has also pledged to protect jobs. The Competition Commission, which has already missed at least three previous deadlines to finish its probe, needs to make a recommendation to the Competition Tribunal.
SABMiller and Coca-Cola first agreed to the Africa bottling merger for non-alcoholic beverages in November 2014, but faced stumbling blocks while trying to gain antitrust approval following the intervention of Economic Development Minister Ebrahim Patel.
Conditions attached to the approval include that the new company, to be called Coca-Cola Beverages Africa, shall have its head office in South Africa and that production of Appletiser will remain in the country. The company will sell at least 20 percent of Appletiser South Africa to black shareholders, part of the government’s effort to redress discrimination against non-whites during apartheid.
“The decision is an endorsement that the merger will support the business agenda within the broader South African political and social context,” Coca-Cola, SABMiller and Gutsche Family Investments, which is also part of the deal, said in a joint statement.
BLOOMBERG