The South African Government and AB InBev agreed approach on public interest commitments in proposed acquisition of SABMiller by AB InBev
An agreed approach has been concluded between the South African Government and AB InBev in relation to the public interest conditions that will be recommended to the Competition Commission and Competition Tribunal in connection with the proposed acquisition of SABMiller by Anheuser-Busch InBev (AB InBev).
The package of commitments addresses employment, localisation of production and inputs used in the production of beer and cider, empowerment in the company, long-term commitments to South Africa and participation of small beer brewers in the local market.
In a groundbreaking commitment, AB InBev has undertaken to ensure that at no point in the future will there be involuntary job losses in South Africa as a result of the transaction. In addition, the company has committed to maintain its total permanent employment levels in South Africa as at the date of closing, for a period of five years.
The company also agreed to invest R1 billion to support small-holder farmers as well as to promote enterprise development; local manufacturing, exports and jobs; the reduction of the harmful use of alcohol (including making available locally produced low and no-alcohol choices for consumers) and green and water-saving technologies.
As part of the R1 billion commitment, AB InBev will finance 800 new black emerging farmers and 20 new commercial farmers to produce barley, hops, maize and malt for the company, with the strategic intent to create additional jobs in the agricultural supply chain. The company committed to expanding the production of barley to be malted and to turn a current net import of barley to a net export of malt (the processed form of grain used in beer brewing).
The commitment will also support other enterprise development initiatives, including through coaching and business incubation and the localisation of inputs into the production of beer, which range from agricultural inputs to packaging.
In addition, AB InBev undertook to work closely with government to reduce the harmful use of alcohol, including through introducing and promoting no-alcohol and lower alcohol products to the South African market to encourage consumers to make lower alcohol choices, including through brewing these products locally where possible.
In terms of the agreed approach, the company will support broad-based empowerment and will maintain South African Breweries’ current Zenzele share-scheme which provides opportunities for black South Africans (including employees) to participate as shareholders, until the scheme expires in 2020. The company will table a proposal within two years of closure of the deal that will set out its long-term empowerment commitments beyond 2020.
As a further indication of its long-term commitment to investment in the country, AB InBev's regional head-office for Africa will be located in Johannesburg and a secondary listing on the Johannesburg Stock Exchange has already been completed.
The agreement also includes commitments by AB InBev to support the participation of small craft-beer producers in local markets.
Welcoming the agreement and AB InBev’s commitments, Minister of Economic Development Ebrahim Patel noted that mergers and acquisitions are subject to specific public interest criteria set out in the Competition Act.
“South African Breweries – the SAB Miller predecessor - has been an important company in the South African economy for many years. This transaction is by far the largest yet to be considered by the competition authorities and it is important that South Africans know that the takeover of a local iconic company will bring tangible benefits,” Minister Patel said.
"Jobs and inclusive growth are the central concerns in our economy. Our competition laws specifically provide for consideration of the employment and public interest impact of mergers and acquisitions. Following the announcement of the proposed acquisition of SAB-Miller, the South African government carefully evaluated the likely impact on jobs, small businesses, farmers and economic empowerment. We engaged with AB InBev to identify commitments that can ensure that the transaction has a net benefit for the country. The commitments made by the company are the most extensive merger-specific undertakings made to date in a large merger. In our view, they meet the requirements of the competition legislation. The agreed terms will be placed before the competition authorities for consideration,” Minister Patel said.
Carlos Brito, CEO of AB InBev added: “We are pleased to have reached this agreement with the South African Government. As we have stated from the outset, we are excited about the growth opportunities and the role South Africa will play in our combined business. Recognising South African Breweries’ important contributions to the South Africa’s economy and society, our commitments seek to build on this deep heritage and we believe there is a huge amount that the two companies can achieve together to the benefit of all stakeholders.”
It is expected that the agreement on terms between Government and the merger parties will expedite the merger proceedings before the South African Competition Authorities. In terms of process going forward, the agreement will be provided to the Competition Commission for consideration as part of its assessment of the competition and public interest impact of the proposed merger. That assessment will culminate in a recommendation by the Commission to the Competition Tribunal.
For more details contact:
Dr Molefe Pule
Cell: mipule@economic.gov.za
