Trade Resources Company News South African Regulator Approves AB InBev's $100bn Acquisition of SABMiller with Conditions

South African Regulator Approves AB InBev's $100bn Acquisition of SABMiller with Conditions

South African competition commission has given conditional approval of Anheuser-Busch InBev’s $100bn acquisition of SABMiller.

The Commission has given to the recommendations to the Competition Tribunal following an investigation into the deal, and the tribunal will have a final say in the proposed acquisition.

During the investigation, the commission has found that the proposed merger raises several competition and public interest concerns, and asked the Tribunal to address them.

The Commission said that there are concerns regarding job losses following the merger, though AB InBev has promised not retrench people in South Africa.

In order to address the competition concerns, the commission has asked the merged company to sell SABMiller's share in Distell, which is the largest producer of ciders in South Africa, followed by SAB. The Commission said that the merger could lead to exchange of commercially sensitive information between AB InBev and Distell.

"The Commission found that SABMiller, through SAB, holds a significant shareholding in Distell Group Limited (Distell)," the commission said in a statement.

"Upon implementation of the merger, AB InBev will be entitled to appoint a certain number of directors to the board of Distell, its direct competitor.

South African competition commission has also suggested that the merged company should invest about $43.9m in domestic agriculture to boost production of barley, hops and maize, as well as promote the entry of black farmers in South Africa.

AB InBev bottles soft drinks for Pepsi outside the country while post merger it will bottle soft drinks for Coca Cola in South Africa.

The Commission has expressed concern that the bottling arrangement for both the soft drinks majors could lead to sharing of commercially sensitive information.

"AB InBev has undertaken to ensure that its employees who are involved in bottling operations for Coca-Cola will not also be involved in its bottling operations for Pepsi , and there will be no sharing of commercially sensitive information between the two."

As the investigation found that the combined entity will be a dominant player in tin metal crowns through its ownership Coleus, AB InBev has agreed to supply tin metal crowns to third parties for a period of five years following closing of the merger.

"In addition to the above, AB InBev has also undertaken that it will not preclude or induce any retailer from offering non -merged entity owned cold storage and non-merged entity owned refrigerator space to competing third parties."

The Commission has also asked AB InBev to continue supply input products, such as hops and malt that are currently supplied by the company to small beer producers

The deal, which has already received approval from European competition commission, will make the combined entity a bigger rival of Heineken in terms of beer sale.

SABMiller said in a statement: "Following on from AB InBev's receipt of exchange control approval from the South African Reserve Bank and the European Commission's approval of the recommended combination with SABMiller plc, 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."

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