The creation of Coca-Cola Beverages Africa has moved a step closer this week, after South Africa’s competition commission recommended the conditional approval of the merger in the country.

The transaction, which was announced in November last year, involves SABMiller, Gutsche Family Investments (GFI) – which is the majority shareholder in Coca-Cola Sabco – and the Coca-Cola Co. At the time, the companies said the new entity will become the world’s tenth largest Coca-Cola bottler.

Earlier this week, the South African competition commission recommended the tie-up to the country’s competition tribunal. If approved, the deal will combine the bottling operations of four of the five authorised Coca-Cola bottlers in South Africa into one unit in the country.

Conditions outlined in the commission’s recommendation include competition and “public interest concerns”. The partners have agreed to purchase all tin cans, glass, plastic bottles and closures, packaging, crates and sugar from local suppliers as well as limit internal job movement.

The new entity has also agreed to invest ZAR500m (US$33.4m) in developing distribution and retail channels in the country, and it will establish a ZAR150m fund to train disadvantaged farmers and suppliers.

The merging parties have also committed to increase the broad-based black empowerment ownership of the company and to divest a “certain percentage of shareholding” in Appletiser South Africa to a black-owned company or consortium.

Acting deputy commissioner, Hardin Ratshisusu said: “These conditions … have been crafted to ensure that the merger does not negatively affect businesses in the value chain that previously benefited from the existence of the individual bottlers in South Africa. In addition, the development funds committed by the merging parties will not only ensure that South African suppliers grow from this consolidation but also be to the benefit of consumers in general.”

Once all regulatory hurdles have been cleared, Coca-Cola Beverages Africa will handle bottling operations in South Africa, Kenya, Ethiopia, Mozambique, Tanzania, Uganda, Namibia, Comoros, Mayotte, Swaziland, Botswana and Zambia.

It remains unclear what effect, if any, Anheuser-Busch InBev’s proposed takeover of SAB will have on the formation of Coca-Cola Beverages Africa. AB InBev already bottles for PepsiCo in several South American countries.

Source: Just-Drinks