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Coca-Cola Beverages Africa Merger Parties & the SA Government Reach Agreement on Public Interest Conditions
SABMiller plc
JSEALPHA CODE: SAB
ISSUER CODE: SOSAB
ISIN CODE: GB0004835483
The Coca-Cola Beverages Africa Merger Parties and the South African
Government Reach Agreement on Public Interest Conditions for Merger
4 May 2016 – A comprehensive set of commitments have been agreed between the Coca-Cola
Beverages Africa (CCBA) merger parties – SABMiller plc, The Coca-Cola Company and Gutsche
Family Investments – and the South African Government, that will be recommended to the Competition
Tribunal in connection with the proposed creation of Africa’s largest soft-drink beverage bottling
operation.
The commitments address concerns regarding employment, access to retail cooler space for smaller
competitors, localisation of production and inputs used in the production of Coca-Cola products and
Appletiser brands, economic empowerment and the location of the headquarters.
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
employees in the bargaining unit will not be subjected to involuntary retrenchment as a result of the
merger and that retrenchments of senior management staff be limited.
The company agreed to invest R800 million to support enterprise development for two groups of
entrepreneurs:
- Creation of a R400 million fund for enterprise development in the agriculture value chain,
particularly to support and train historically disadvantaged developing farmers and small
suppliers of inputs to Appletiser and CCBSA products on a competitive and sustainable
basis; and
- R400 million incremental investment to develop downstream distribution and retail
capabilities with associated skills development and training. This is expected to create an
additional 20,000 black-owned retailers.
These commitments will ensure that CCBA, which will be headquartered in South Africa, will support
economic and social development in the country in a number of significant ways. The merger parties
have made undertakings related to increasing empowerment in Coca-Cola Beverages South Africa
(CCBSA), the South African-based subsidiary of CCBA, and supporting long term investment in South
Africa.
Detailed commitments to localisation of their supply-chains have been accompanied with an agreement
that the merger parties will convene an annual local Supplier Development Conference, produce an
annual report on localisation and train managers on the advantages of localisation.
The merger parties agreed to a number of commitments which align closely with the South African
government’s national imperatives, including by:
o Providing for small retail outlets (smaller than 20 m2) to be free to provide 10% of visible
space in the Coca-Cola coolers to smaller competitor products where there are no other
coolers available in the retail outlets
o Increasing the broad-based empowerment ownership of CCBSA to 20% and selling a
20% shareholding in Appletiser South Africa to appropriate black shareholders who will
be expected to participate actively in the business;
o Maintaining and growing the Appletiser South African production operations to serve the
domestic market and as a base from which to export Appletiser to the rest of the
continent and elsewhere in the world.
Headquartering CCBA in South Africa will result in additional revenue for local and national
governments; further cement the country’s standing as the investment and business ‘gateway to the
rest of Africa’ and demonstrates a clear commitment by the merger parties to invest in South Africa for
the long term.
Welcoming the agreement and the CCBA commitments, Ebrahim Patel, Minister of Economic
Development noted that the agreement laid the basis for deeper industrialisation in the South African
economy.
“Employment creation and development of small businesses are a vital part of building a more inclusive
economy. The commitments made by the merger parties will open access to cooler space in smaller
spaza shops and retail outlets to competing brands. Employment levels will be protected for three
years. The R800 million commitment builds on a number of similar commitments made recently which,
taken together, will be a major boost for small-holder farming,” he said.
Alan Clark, CEO, SABMiller noted: “I am very happy that we have reached this agreement and hope we
now have a clear path to the conclusion of this transaction and the creation of Coca-Cola Beverages
Africa. As the location of CCBA’s headquarters, South Africa will be the heart of this business and our
belief is that our commitments will provide a strong footing from which the business will flourish in South
Africa and across the continent.”
James Quincey, President and Chief Operating Officer of The Coca-Cola Company commented:
“Today’s announcement ensures that the creation of Coca-Cola’s largest bottling partner in Africa will
strengthen our business while also closely aligning with the South African government’s national
imperatives for social and economic development. Coca-Cola has been firmly committed to our
business in Africa and supporting local communities since we first began operations in South Africa
almost 90 years ago, and this agreement marks the latest important step in that journey.”
Gutsche Family Investments (GFI) chairman Phil Gutsche said: “I am pleased that we have been able
to reach agreement in such a constructive manner which has also enabled us to build relationships and
mutual understanding, and I trust that final approval will follow shortly. I believe CCBA creates an
opportunity for continued growth and demonstrates our confidence about doing business in South
Africa and in Africa.”
A Competition Tribunal hearing on the proposed formation of Coca-Cola Beverages Africa as part of
the regulatory approval process with the South African Competition Authorities is due to commence on
May 9th 2016. The agreement between the merger parties and the South African government is
expected to expedite the approval process.
Editors Background Notes
- In November 2014, The Coca-Cola Company, SABMiller plc and Gutsche Family Investments
(GFI, majority shareholders in Coca-Cola Sabco) announced they had agreed to combine the
bottling operations of their non-alcoholic ready-to-drink beverages businesses in Southern and
East Africa.
- CCBA will serve 12 high growth countries, accounting for approximately 40% of all Coca-Cola
beverage volumes in Africa. In the first phase, the countries are South Africa, Kenya, Ethiopia,
Mozambique, Tanzania, Uganda, Namibia, Mayotte and Comoros. Botswana, Swaziland and
Zambia will be contributed as part of the second phase of the integration
- The bottling operations will have pro forma annual revenue of US$2.9-billion.
- The proposed transaction is subject to a number of regulatory approvals. This includes from the
Competition Authorities in South Africa, Namibia, Tanzania, Kenya as well as The Common
Market for Eastern and Southern Africa (Comesa).
- The parties have now concluded the submission of the above merger filings, and are committed
to engaging with each individual authority where they require it. To date, the regulatory authorities
in Namibia and Comesa have unconditionally approved the transaction. The authorities in Kenya
and Tanzania have approved the transactions with some conditions.
Further enquiries
SABMiller plc
Christina Mills
Director, Group Communications and Reputation
Tel: +44 7825 275 605
Richard Farnsworth
Group Media Relations
Tel: +44 7734 776 317
Robyn Chalmers (SABMiller Africa)
Head: Corporate Communications
Tel: +27 11 881 8679
The Coca-Cola Company
Dan Baxter
Tel: +971565017110
danbaxter@coca-cola.com
Vukani Magubane
Tel: +27 764 02 0237
vmagubane@coca-cola.com
Coca-Cola Sabco
Cathy Albertyn
Group Human Resources Director
Tel: +27 41 395 4078
Notes to editors
About The Coca-Cola Company
The Coca-Cola Company (NYSE: KO) is the world's largest beverage company, refreshing consumers
with more than 500 sparkling and still brands and more than 3,800 beverage choices. Led by Coca-
Cola, one of the world's most valuable and recognizable brands, our company’s portfolio features 20
billion-dollar brands, 18 of which are available in reduced-, low- or no-calorie options. Our billion-dollar
brands include Diet Coke, Coca-Cola Zero, Fanta, Sprite, Dasani, vitaminwater, Powerade, Minute
Maid, Simply, Del Valle, Georgia and Gold Peak. Through the world's largest beverage distribution
system, we are the No. 1 provider of both sparkling and still beverages. More than 1.9 billion servings
of our beverages are enjoyed by consumers in more than 200 countries each day. With an enduring
commitment to building sustainable communities, our company is focused on initiatives that reduce our
environmental footprint, create a safe, inclusive work environment for our associates, and enhance the
economic development of the communities where we operate. Together with our bottling partners, we
rank among the world's top 10 private employers with more than 700,000 system associates. For more
information, visit Coca-Cola Journey at www.coca-colacompany.com, follow us on Twitter at
twitter.com/CocaColaCo, visit our blog, Coca-Cola Unbottled, at www.coca-colablog.com or find us on
LinkedIn at www.linkedin.com/company/the-coca-cola-company.
SABMiller plc
SABMiller is in the beer and soft drinks business, bringing refreshment and sociability to millions of
people all over the world who enjoy our drinks. The company does business in a way that improves
livelihoods and helps build communities.
SABMiller is passionate about brewing and has a long tradition of craftsmanship, making superb beer
from high quality natural ingredients. Our local beer experts brew more than 200 beers from which a
range of special regional and global brands have been carefully selected and nurtured.
SABMiller is a FTSE-20 company, with shares trading on the London Stock Exchange, and a
secondary listing on the Johannesburg Stock Exchange. The group employs around 69,000 people in
more than 80 countries, from Australia to Zambia, Colombia to the Czech Republic, and South Africa to
the USA. Every minute of every day, more than 140,000 bottles of SABMiller beer are sold around the
world.
In the year ended 31 March 2015, SABMiller sold 324 million hectolitres of lager, soft drinks and other
alcoholic beverages, generating group net producer revenue of US$26,288 million and EBITA of
US$6,367 million.
Coca-Cola Sabco
Coca-Cola Sabco is 80% owned by Gutsche Family Investments and its headquarters are in Port
Elizabeth, South Africa. Coca-Cola Sabco has been a Coca-Cola bottler since 1940, having grown to
be Africa’s second largest Coca-Cola Franchised Bottler. In 1995, the Gutsche family merged their
bottling interests with The Coca-Cola Company’s interest in Africa in order to expand and further
develop Coca-Cola Sabco’s beverage interests in Africa. Coca-Cola Sabco employs approximately
8,000 staff across its bottling operations in South Africa, Namibia, Mozambique, Kenya, Tanzania,
Ethiopia and Uganda.
Sponsor: J.P. Morgan Equities South Africa (Pty) Ltd
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