Coca-Cola Co.’s plan to buy out brewer Anheuser-Busch InBev NV from an African bottling joint venture originally agreed to with SABMiller Plc may have to go through a second regulatory process just five months after the initial deal was concluded.
The combination of Coca-Cola and SABMiller’s bottling operations for non-alcoholic beverages in southern and eastern Africa was approved by South Africa’s competition authorities in May, 18 months after the tie-up was announced. After AB InBev completed its takeover of SABMiller earlier this week, Coca-Cola said it plans to trigger a change of control clause to buy SABMiller’s majority stake in the venture.
The size of the companies involved indicates that the deal will have to come back to the competition authorities, Hardin Ratshisusu, the Competition Commission’s acting deputy commissioner, said by phone on Friday. Atlanta-based Coca-Cola may have to seek fresh regulatory approval in all 11 southern and eastern African countries that are affected by the proposal, Ratshisusu said.
The Competition Tribunal, on the commission’s recommendation, approved the bottling venture with conditions including that jobs were protected and two development funds were set up to help local farmers.
As the continent’s largest Coca-Cola bottler, with annual revenue of about $3 billion, SABMiller holds 57 percent of Coca-Cola Beverages Africa and Coca-Cola 11.3 percent. The balance is owned by the majority owner of Coca-Cola’s bottling partner in South Africa, Gutsche Family Investments. Coca-Cola Beverages Africa accounts for about 40 percent of Coca-Cola’s African soft drink sales.
“It seems this is a bit of a defensive move,” Jonathan Fyfe, an analyst at Mirabaud Securities in London, said by phone . “With Coca-Cola being flagged in speculation about what AB InBev buys next, the question then is do you want to show them how it works?”
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