Home Africa Africa: Authorities approve large soft drink operation

Africa: Authorities approve large soft drink operation

SHARE

The South African Competition Tribunal has given the green light for The Coca-Cola Beverages Africa (CCBA) merger parties – SABMiller plc, The Coca-Cola Company, and Gutsche Family Investments – to form Africa’s largest soft drink beverage operation.

The parties said the decision is an endorsement that the merger will support the business agenda within the broader South African political and social context.

The Tribunal’s approval of the merger follows agreements reached between the merger parties and the South African Government, unions and the Competition Commission on commitments that will ensure the formation of Africa’s leading Coca-Cola bottling partner helps support economic and social development in South Africa.

The commitments include detailed conditions related to employment, access to retail cooler space for smaller competitors, localization of production and inputs used in the production of Coca-Cola products and Appletiser brands, economic empowerment and the location of its headquarters and tax residency in South Africa.

The merger parties undertook to ensure that the merged entity maintains its total permanent employment at current levels for a period of three years from the date of approval of the deal; that there will be no involuntary retrenchments of employees in the bargaining unit and that retrenchments of non-bargaining unit skilled staff be limited.

The merger parties have agreed to invest R800 million (US$51.74 million) to support enterprise development for two groups of entrepreneurs.

They will create a R400 million fund for enterprise development in the agriculture value chain, particularly to support and train historically disadvantaged developing farmers and small suppliers.

They will also make a R400 million incremental investment to develop downstream distribution and retail aspects of Coca-Cola Beverages South Africa (CCBSA) as well as the skills development of an additional 25,000 black-owned retailers of CCBSA’s products.

The merger parties have also agreed to increase black ownership of CCBSA to 20% and will sell a 20% shareholding in Appletiser South Africa to black shareholders who will play an active role in the business.

The merger parties also agreed to a number of commitments which align closely with other national imperatives, including granting the freedom in certain circumstances for small retail outlets to provide space in Coca-Cola coolers for smaller competitors’ products.

Appletiser SA and its South African production operations will be maintained to both grow the operations domestically and serve as a base from which to export Appletiser.

The headquarters of CCBA and CCBSA will be located in South Africa, ensuring the companies will remain tax-resident in the country and bring additional revenues to local and national governments.