15 Apr 2016 AB InBev pledges R1bn South African fund to smooth SABMiller deal
The deal struck between the Budweiser maker and the SA government includes a pledge to preserve its full-time employment levels in the country for five years after the deal closes and to not make any involuntary job cuts, Leuven, Belgium-based AB InBev said in a statement yesterday.
It also includes financial help for new farms to produce raw materials like hops and barley for the combined company.
“This transaction is by far the largest yet to be considered by the competition authorities and it’s important that South Africans know that the takeover of a local iconic company will bring tangible benefits,” the country’s Economic Development Minister, Ebrahim Patel, said in the statement. “Jobs and inclusive growth are the central concerns in our economy.”
The pledge echoes one made by Wal-Mart Stores, the world’s biggest retailer, which agreed to set up a R200m development fund when it acquired Massmart Holdings in 2011.
South Africa is just one of the countries where AB InBev needs regulatory approval to combine the world’s two biggest brewers. The company has also agreed to retain a secondary listing on the Johannesburg Stock Exchange and locate its Africa office in the city.
The agreement is “a major step forward in getting the proposed acquisition of SABMiller completed,” Eddy Hargreaves, an analyst at Canaccord Genuity.
South Africa’s Competition Commission asked for two extensions this month to a deadline to complete its investigation into the deal, without giving reasons for the delay. The country has a history of creating obstacles for foreign takeovers, taking 18 months to grant approval to Wal-Mart to buy Massmart. SABMiller’s deal to merge its African soft-drink bottling assets with those of Coca-Cola Co. has yet to be completed, 17 months after it was announced.
The antitrust agency now has until May 5 to complete its assessment of the beer deal’s impact on the South African market.
Other commitments from AB InBev include work to reduce the harmful use of alcohol and support for South Africa’s empowerment policies, which aim to redress inequality caused by apartheid.
Source: Bloomberg