Coca-Cola to buy AB InBev stake in African subsidiary

Coca-Cola intends to buy the stake global beer giant Anheuser-Busch InBev holds in Coca-Cola Beverages Africa, the two companies announced October 11, 2016. The proposed deal follows AB InBev's mega-takeover of SABMiller to create the world's biggest beer company.

That buyout allowed the Belgian-Brazilian maker of Budweiser and Stella Artois to recover the stake its British-South African rival held in Coca-Cola's African subsidiary. SABMiller, which did much of the US beverage giant's bottling worldwide, held a majority share in it.

Coca-Cola reported that it has a number of existing partners who are highly qualified and interested in these bottling territories.

AB InBev issued a statement meanwhile saying that Coca-Cola had notified it “of its intention to acquire AB InBev's stake in Coca-Cola Beverages Africa,” adding it did not expect the deal to have a financial impact.

Like AB InBev, Coca-Cola said that over the next few months it will “negotiate the terms of the transaction with AB InBev according to the contractual parameters.”

 The size of the companies involved indicates that the deal will have to come back to the competition authorities. Atlanta-based Coca-Cola may have to seek fresh regulatory approval in all 11 southern and eastern African countries that are affected by the proposal.

The Competition Tribunal, on the commission’s recommendation, approved the bottling venture with conditions including that jobs were protected and two development funds were set up to help local farmers.

As the continent’s largest Coca-Cola bottler, with annual revenue of about $3 billion, SABMiller holds 57 percent of Coca-Cola Beverages Africa and Coca-Cola 11.3 percent. The balance is owned by the majority owner of Coca-Cola’s bottling partner in South Africa, Gutsche Family Investments. Coca-Cola Beverages Africa accounts for about 40 percent of Coca-Cola’s African soft drink sales.