AB InBev wins Competition Tribunal approval for SABMiller takeover

(Left to right) Donna Oosthuyse, director of Capital Markets at JSE, AB InBev CEO Carlos Brito and JSE CEO Nicky Newton-King. (Supplied)
(Left to right) Donna Oosthuyse, director of Capital Markets at JSE, AB InBev CEO Carlos Brito and JSE CEO Nicky Newton-King. (Supplied)

Cape Town - Anheuser-Busch (AB) InBev has passed a key competition hurdle in its R1.5trn takeover of SABMiller, after the South African Competition Tribunal approved the merger on Thursday.

LATEST: AB InBev faces two more hurdles before SAB can say cheers

The approval is subject to wide ranging conditions designed to address both public interest and competition concerns arising from the merger, the Tribunal said in a statement on Thursday.

The conditions are similar to those proposed by the Competition Commission and the ones agreed to between the merging parties and the departments of Economic Development, Trade and Industry and Agriculture, Forestry and Fisheries, it said.

On April 14, AB InBev agreed to create a R1bn fund that will support the South African beer industry and protect jobs in the country to smooth approval for its proposed, Reuters explained.

SABMiller and Coca-Cola also agreed to concessions with government to win approval for a deal to combine their soft-drink operations, said Reuters in May.

At the hearing of this matter the Tribunal heard submissions from the Competition Commission, merging parties, the Minister of Economic Development, Heineken, the Black Business Forum, Grain SA, the Tavern Owners Association, as well as Distell. SABMiller has a significant holding in Distell, which is the largest producer of ciders in South Africa, followed by SABMiller.

The material changes to the conditions relate to the mechanism for the timing and mechanics of the disposal of the SABMiller interest in Distell. “This is, however, confidential…”

Changes also focus on the access rights of rivals to fridge space supplied to outlets by the merged firm. “Outlet owners can reserve up to 10% of one merged party supplied fridge for rival small beer producers,” it said.

“An additional 10%, over and above the already allocated 10% for small beer producers, may be allocated to rival cider producers, but this provision for cider producers only applies for five years.”

Other conditions include the access of competitors to metal bottle crowns supplied by the SABMiller controlled entity Coleus Packing. This has been altered from a limited period of five years, to an unlimited period as long as the merged entity continues to control Coleus.

It also said there had to be supply conditions of input suppliers, particularly in respect of barley farmers. Barley farmers are concerned about whether an existing industry pricing mechanism will change post-merger given the international sourcing power ABI brings to SAB.

There is also an evergreen restriction on merger related retrenchments. Whilst retained, this has been clarified with a provision which shifts the burden of proving the retrenchment is a result of the merger to the employee after a period of five years.

There is also a provision relating to an employee share scheme known as Zenzele, which was the subject of contention between the union Food and Allied Workers Union (FAWU) and the merging parties, has been removed at the request of both parties.

“The Zenzele Scheme is set to mature in 2020,” it said. “The issue raised by FAWU was that in terms of the conditions proposed by the Commission the Zenzele shareholders were being treated differently to the holders of other classes of shares.

“The parties agreed during the course of the hearing that these provisions would be excised from the conditions and would be dealt with in another forum.”

Brent Crude
All Share
Top 40
Financial 15
Industrial 25
Resource 10
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Please select an option Oops! Something went wrong, please try again later.
I'm not really directly affected
18% - 1916 votes
I am taking a hit, but should be able to recover in the next year
23% - 2523 votes
My finances have been devastated
34% - 3753 votes
It's still too early to know what the full effect will be
25% - 2688 votes