AB Inbev gets SAB merger nod from Sarb

(File, iStock)
(File, iStock)

Cape Town - Anheuser-Busch (AB) InBev has secured exchange control approval from the South African Reserve Bank (Sarb) for its proposed merger with SABMiller, it announced on Thursday.

“Approval from the Sarb represents an important milestone in the process of securing regulatory clearance for the transaction in South Africa,” AB Inbev, which has a JSE listing [JSE:ANB], said in a statement.

“Following on from the European Commission's approval of its recommended combination with SABMiller, AB InBev believes it is well on track to secure the necessary regulatory approvals that will allow for closing in the second half of 2016.”

South Africa’s Competition Commission will unlikely make a decision on whether to recommend AB InBev's takeover of SABMiller this week, further extending the regulatory process, a person familiar with the situation told Bloomberg on Wednesday.

The body is continuing with the investigation into the R1.657trn deal, said the person, who asked not to be named as the deliberations are private. There is a possibility of completing the probe this week, but it’s very small, the person said. The Competition Commission has missed at least four earlier deadlines to complete its probe into the takeover of SABMiller.

Seeking global support

Ab InBev is seeking regulatory approval around the world to combine with SABMiller [JSE:SAB], creating the world’s largest brewer. The maker of Budweiser and Stella Artois won support from the European Union on Tuesday after agreeing to offload SABMiller brands including Peroni and Grolsch, Bloomberg reported

The European Commission said on Tuesday that the proposed sale of SABMiller’s Peroni, Grolsch and Meantime beer brands to Asahi Group Holdings as well as the divestment of Pilsner Urquell and other brands in central and eastern Europe will ensure “EU consumers aren’t worse off.”

“Europeans buy around €125bn (R2.17trn) of beer every year, so even a relatively small price increase could cause considerable harm to consumers,” EU Competition Commissioner Margrethe Vestager said in a statement.

“With this clearance, we remain firmly on track for a closing in the second half of 2016," AB InBev CEO Carlos Brito said in a statement.

US stumbling block

One stumbling block could be in the US, where competition authorities are probing the company over its incentives encouraging independent distributors to sell more of its brands instead of competing craft beers.

AB Inbev’s Gemma Hart defended the incentive programme as a "reflection of just how competitive the US beer industry has become," according to Reuters.

"Our voluntary incentive programme clearly does not prevent or inhibit other brands from getting to market," she said on Wednesday.

AB InBev, based in Leuven, Belgium, is doing all it can to secure regulatory approval around the globe. It agreed to create a $69m (R1bn) fund to support the South African beer sector and protect jobs in the country where SAB was founded. It’s also selling stakes in joint ventures SAB held in the US and China.

AB InBev has now obtained approval in 14 jurisdictions. Where regulatory clearance is still pending, the company said it “will continue to engage proactively with the relevant authorities to obtain the necessary clearances as quickly as possible.”

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