South African Competition Commission gives their conditional blessing to formation of Coca-Cola Beverages Africa

The formation of Coca-Cola Beverages Africa is one step closer to becoming a reality as South Africa’s Competition Commission has given their conditional approval to the merger.

The transaction, which was announced in November 2014, will involve the coming together of SABMiller’s Soft drinks operations in Africa, Coca-Cola SABCO, which is 80 percent owned by Gutsche Family Investments (GFI) and the Coca-Cola Company.

The merger, if approved would represent approximately 40 percent of all Coca-Cola beverage volumes bottled on the continent and will serve 12 high-growth countries in Southern and Eastern Africa – Botswana, Comoros, Ethiopia, Kenya, Mayotte, Mozambique, Namibia, South Africa, Swaziland, Tanzania, Uganda and Zambia.

Earlier last week, the South African Competition Commission recommended the merger to the country’s competition tribunal.

Conditions outlined in the commission’s recommendation include competition and “public interest concerns”. The merging partners have agreed to purchase all beverage cans, glass, plastic bottles and closures, packaging, crates and sugar from local suppliers as well as limit internal job movement.

The partners have also agreed to invest $33.4m in developing distribution and retail channels in the country and would establish a ZAR150m fund to train disadvantaged farmers and suppliers.

The partners also did agree to increase part ownership of the new entity to black South Africans as part of a black empowerment programme. The company will divest a “certain percentage of shareholding” in Appletiser South Africa to a black-owned company or consortium.

Acting deputy commissioner, Hardin Ratshisusu said: “These conditions … have been crafted to ensure that the merger does not negatively affect businesses in the value chain that previously benefited from the existence of the individual bottlers in South Africa. In addition, the development funds committed by the merging parties will not only ensure that South African suppliers grow from this consolidation but also be to the benefit of consumers in general.”

It is unclear what effect, if any, AB InBev, SABMiller’s pending beer merger would have on the formation of the new entity. AB InBev already bottles for PepsiCo in several South American countries.

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