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AB InBev makes (South African) job pledges to clinch SABMiller deal
3:09 CAT | 15 Apr 2016
World Finance (File photo)
Anheuser-Busch InBev SA late Thursday said it agreed on its approach on public interest commitments in South Africa as it progresses its proposed takeover of London-listed SABMiller PLC.
The merger of AB InBev and SABMiller, which will see AB InBev pay GBP71.00 billion for the London-listed firm, will create by far the biggest beer business in the world with a market capitalisation of around USD280.0 billion. The pair are currently the world’s first and second largest brewers, respectively.
On Thursday, AB InBev said it has struck a deal with the government of South Africa concerning 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,” said AB InBev.
AB InBev also said it plans to invest ZAR1.00 billion to support small-holder farmers and to generally promote local manufacturing, whilst also reducing the harm caused by alcohol use and investing in green and water-saving technology.
As part of that investment, AB InBev will finance 800 new 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.
“This transaction is by far the largest yet to be considered by the competition authorities and it’s important that South Africans know that the takeover of a local iconic company will bring tangible benefits,” the country’s Economic Development Minister Ebrahim Patel said in the statement. “Jobs and inclusive growth are the central concerns in our economy.”
The company has also agreed to retain a secondary listing on the Johannesburg Stock Exchange and locate its Africa office in the city. SABMiller, which started selling beer to gold miners in Johannesburg in 1895, controls 90% of South Africa’s market.
Other commitments include work to reduce the harmful use of alcohol and support for South Africa’s empowerment policies, which aim to redress inequality caused by apartheid.
CLSA analyst Caroline Levy, cited by The Washington Post, said the agreement is a positive step and puts the AB InBev-SABMiller deal on schedule to close in the second half of the year. The company also needs regulatory approval in the U.S., Europe and China.
“They still have a lot to do, but…this is a big one because South Africa is a lot of the reason they want this deal,” Ms. Levy said.
SABMiller has a strong presence in Africa, one of the few global beer markets expected to grow in the coming years with a compound annual growth in volume of 3.7% through 2020, according to industry tracker Plato Logic.
SABMiller’s South African and African regions are consolidated into one region. Its operations in Africa cover 17 countries, including Botswana, Mozambique, Nigeria, South Africa, Tanzania, Uganda and Zambia.
SABMiller’s Mozambican subsidiary is Cervejas de Moçambique (CDM), established in 1995 when SABMiller Plc acquired the Manica Brewery in Beira (established in 1959) and the Mac Mahon Brewery in Maputo (established in 1965). In 2001 the Company acquired the Laurentina Brewery with its iconic Laurentina brand that traces its history back to 1932.
CDM has recently announced a US2 million investment in a new factoryin Mozambique to produce a new non-alcohlic beverage.
CDM’s brands include 2M, Manica, Laurentina Preta, Laurentina Premium and Clara as well as Barons, Redds, Castle Milk Stout and Carling Black Label. In 2009 the Company’s newly launched Laurentina Premium received a Grand Gold Award at the annual Monde Selection awards, an honour bestowed on only a handful of beers worldwide
Source: London South East / Fin 24 / The Washington Post / ACIS / O País
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