SABMiller and Coca-Cola agree bottling merger terms

London-based brewer SABMiller and US drinks brand Coca-Cola have struck a deal with the South African government to merge their bottling operations in Africa.

The deal was originally agreed in principle back in November 2014, with Coca-Cola agreeing to merge its bottling assets across twelve African nations with those of SABMiller and the privately-held firm Gutsche Family Investments. The merger would generate around 40 per cent of Coca-Cola’s entire output across the continent.

As part of the deal, SABMiller — which is itself about to be acquired by Anheuser-Busch InBev NV — will hold a 57 per cent stake in a newly created company called Coca-Cola Beverages Africa. Coca-Cola itself would retain an 11.3 per cent stake, with Gutsche taking the rest of the shares.

However, the deal had been left in limbo for the last two years, due to the South African government expressing concerns over jobs in the country. But a series of concessions by both SABMiller and Coca-Cola has convinced the government to give the deal the green light.

The concessions include an agreement to keep employment levels stable for at least three years after the deal goes through, with minimal disruption to senior positions. SABMiller also pledged an agriculture and retail investment package worth £37.5 million to South Africa. Additionally, Coca-Cola will make 10 per cent of its fridge space available to smaller drinks manufacturers.

In a recent statement, Alan Clark, the chief executive of SABMiller, said: “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.”

For more information on the subject, see the Business Sale Report resources on post merger integration.

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