JOHANNESBURG, SOUTH AFRICA, 10 May 2016 – The Coca-ColaBeverages Africa (CCBA) merger parties - SABMiller plc, The Coca-Cola Company, and Gutsche Family Investments - have welcomed the approval given by the South African Competition Tribunal, with agreed conditions, to the formation of Africa’s largest soft-drink beverage operation. The parties said the decision is an endorsement that the merger will support the business agenda within the broader South African political and social context.
The Tribunal’s approval of the merger follows agreements reached between the merger parties and the South African Government, unions and the Competition Commission on a comprehensive set of commitments that will ensure the formation of Africa’s leading Coca-Cola bottling partner helps support economic and social development in South Africa. The merger parties expect the transaction to complete as soon as practicable.
The commitments include detailed conditions related to 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 its headquarters and tax residency in South Africa.
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 there will be no involuntary retrenchments of employees in the bargaining unit and that retrenchments of non-bargaining unit skilled staff be limited.
The merger parties have agreed to invest R800 million to support enterprise development for two groups of entrepreneurs. They will create a R400 million fund for enterprise development in the agriculture value chain, particularly to support and train historically disadvantaged developing farmers and small suppliers. They will also make a R400 million incremental investment to develop downstream distribution and retail aspects of Coca-Cola Beverages South Africa (CCBSA) as well as the skills development of an additional 25,000 black-owned retailers of CCBSA’s products.
In committing itself to broad-based black economic empowerment aligned to the SA government’s imperative to equalise economic opportunity, the merger parties have also agreed to increase black ownership of CCBSA to 20% and will sell a 20% shareholding in Appletiser South Africa to black shareholders who will play an active role in the business.
The merger parties also agreed to a number of commitments which align closely with other national imperatives, including granting the freedom in certain circumstances for small retail outlets to provide space in Coca-Cola coolers for smaller competitors’ products. Appletiser SA and its South African production operations will be maintained to both grow the operations domestically and serve as a base from which to export Appletiser.
The headquarters of CCBA and CCBSA will be located in South Africa, ensuring the companies will remain tax-resident in the country and bring additional revenues to local and national governments. Headquartering CCBA in South Africa will further cement the country’s standing as the investment and business ‘gateway to Africa’; and the proposed merger of CCBA demonstrates a clear commitment by the merger parties to invest in South Africa for the long term.
Alan Clark, CEO, SABMiller noted: “The creation of Coca-Cola Beverages Africa is more than the creation of a company with common interests and a long term growth plan: the merger is set to deliver demonstrable benefits to South Africa by way of significant inward investment and additional tax revenues, job creation and a number of specific benefits that address the national imperatives of SMME creation, local procurement, transformation, and growth in the agricultural sector.”
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 delighted that, with the approval of the merger by the Competition Tribunal, we will be able to deliver the significant benefits promised by the creation of CCBA. Given the scope and reach of the new company, and its commitment to being headquartered in South Africa, the merger helps position the country as the undisputed economic gateway to Africa.”
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 transaction
- 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, Tanzania and South Africa have approved the transactions with some conditions.
Director, Group Communications and Reputation
Tel: +44 7825 275 605
Group Media Relations
Tel: +44 7734 776 317
Robyn Chalmers (SABMiller Africa)
Head: Corporate Communications
Tel: +27 11 881 8679
The Coca-Cola Company
Tel: +971 56 501 7110
Tel: +27 764 02 0237
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 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 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-ColaCompany’s interest in Africa in order to expand and further develop Coca-ColaSabco’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.