AB InBev will speed up Distell share sale to secure SABMiller

Bottles of beer and cider produced by Belgian-Brazilian group Anheuser-Busch InBev, and British-South African brewer SABMiller. (AFP)
Bottles of beer and cider produced by Belgian-Brazilian group Anheuser-Busch InBev, and British-South African brewer SABMiller. (AFP)

Johannesburg - Anheuser-Busch (AB) InBev [JSE:ANB] agreed to sell SABMiller's [JSE:SAB] stake in South African drinks maker Distell Group over a shorter time period than the three years recommended by the Competition Commission, an attempt to smooth the path toward regulatory approval for the brewing industry’s biggest-ever deal.

“What was agreed was a shorter time period to effect the divestment,” Frank Snyckers, an advocate for AB InBev and SABMiller, said in an interview in Pretoria on Wednesday. Further details of the commitment are confidential, he said during the first day of a Competition Tribunal hearing into the takeover.

Distell had earlier told the Tribunal that a three-year timeframe to offload the 26% stake would create uncertainty for the Stellenbosch, South Africa-based company, which is listed in Johannesburg. It would be in the best interest of Distell and the public if AB InBev disposed of the stake “reasonably quickly”, said the company’s lawyer, Jeremy Gauntlett.

The Competition Commission recommended AB InBev’s R1.5trn acquisition of SABMiller be approved earlier this month, with conditions such as the sale of the R9.1bn Distell stake. London-based SABMiller is the second-largest shareholder in the maker of Amarula liquor and Klipdrift brandy, behind billionaire Johann Rupert’s Remgro, which owns 53%. Distell shares gained 1.7% to R158.75 by the close in Johannesburg, valuing the company at R35bn.

Investment boost

AB InBev is trying to get regulatory approval for the takeover around the world, and is poised to get the go-ahead from the the US Justice Department and China’s Ministry of Commerce, according to people familiar with the matter.

A key date in the process is August 12, when SABMiller is scheduled to pay its dividend. AB InBev will receive the payout if the deal is completed by then. SABMiller, the brewer of Castle and Grolsch lagers, traces its roots back to 19th century Johannesburg.

The acquisition could deliver as much as R267bn in foreign direct investment to the South African economy, Snyckers told the Competition Tribunal. FDI in the country slumped to about R22bn last year, according to Reserve Bank data, the lowest since 2006.

There’s an “undeniable benefit to the economy of the largest foreign direct investment effect in the history of this country”, Snyckers said.

The Competition Tribunal hearing into the AB InBev-SABMiller deal is scheduled to run until June 24. South Africa’s Food and Allied Workers Union, which wants an SABMiller employee-share programme wound up early and replaced with a new plan, will give evidence on Thursday, general secretary Katishi Masemola said.

Heineken also made submissions to the Tribunal, asking for changes to conditions including those related to space allocations in retail outlets. Other merger conditions recommended by the Competition Commission include protecting jobs and setting up a R1bn fund to support local farmers.

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