AB InBev-SABMiller Deal Clears a South Africa Hurdle
May 31 2016 - 12:30PM
Dow Jones News
Anheuser-Busch InBev NV on Tuesday cleared a regulatory hurdle
in South Africa, gaining approval of its acquisition of SABMiller
PLC from South Africa's Competition Commission.
The deal now goes to South Africa's Competition Tribunal for
final clearance.
South Africa is one of four markets where AB InBev, the world's
largest brewer, must gain regulatory approval before it can close
its roughly $108 billion takeover of rival SABMiller. Last week,
Europe became the first of those four marketsto approve the deal.
Regulators in China and the U.S. are still reviewing the
merger.
AB InBev called the approval granted by South Africa's
Competition Commission "an important milestone." The company said
that it is "well on track to secure necessary regulatory approvals"
to close its acquisition of SABMiller in the second half of 2016.
The deal will create the world's largest brewer, with a nearly 30%
market share.
The South Africa Competition Commission's approval came a little
over a month after AB InBev pledged to create a $69 million
investment fund in South Africa and promised that no employees in
the country would lose their jobs as a result of the merger. In
April, AB InBev said the investment fund would support farmers,
local manufacturing, jobs and the reduction of harmful alcohol use
in South Africa.
Despite those pledges from AB InBev, the commission put some
conditions on its approval of the AB InBev-SABMiller deal. The most
significant of those was a pledge that AB InBev will divest
SABMiller's stake in Distell Group Ltd., South Africa's largest
cider producer. The commission said the sale would come within
three years of completion of the AB InBev-SABMiller
combination.
In addition to that condition, AB InBev pledged to provide
competitors with metal bottle caps and work to provide 10% of
retailer cooler space to local craft brewers. The merger would give
AB InBev ownership interest in Coleus Packaging, which is South
Africa's only producer of metal bottle caps. The commission said AB
InBev agreed to supply caps to other companies for a period of five
years after the merger.
The Competition Commission also recommended that AB InBev
continue to supply hops and malt to small beer producers.
The South Africa Competition Commission also raised concerns
about AB InBev's bottling operations with PepsiCo Inc. in Latin
America and the potential competitive issues that would arise after
acquiring SABMiller's interest in Coca-Cola Co. bottling operations
in South Africa. To address that concern, South African regulators
said AB InBev ensured that employees involved in bottling
operations for Coca-Cola wouldn't also be involved in bottling
operations for Pepsi, and there would be "no sharing of
commercially sensitive information between the two."
Write to Tripp Mickle at Tripp.Mickle@wsj.com
(END) Dow Jones Newswires
May 31, 2016 13:15 ET (17:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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