South Africa: Minister Welcomes Coca-Cola Merger Deal

Economic Development Minister Ebrahim Patel has welcomed commitments between the Coca-Cola Beverages Africa (CCBA) merger parties - SABMiller Plc, The Coca-Cola Company and Gutsche Family Investments, as well as the South African government.

The commitments will be recommended to the Competition Tribunal in connection with the proposed creation of Africa's largest soft drink beverage bottling operation.

According to the Department of Economic Development, the commitments address concerns regarding 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 the headquarters.

"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," the department said in a statement on Wednesday.

The parties also agreed that employees in the bargaining unit will not be subjected to involuntary retrenchment as a result of the merger and that retrenchments of senior management staff be limited.

The company agreed to invest R800 million to support enterprise development for two groups of entrepreneurs.

The enterprise development includes the creation of a R400 million fund for enterprise development in the agriculture value chain, particularly to support and train historically disadvantaged developing farmers and small suppliers of inputs to Appletiser and Coca-Cola Beverages South Africa (CCBSA -- the South African-based subsidiary of CCBA) products on a competitive and sustainable basis.

Furthermore, there will be a R400 million incremental investment to develop downstream distribution and retail capabilities with associated skills development and training. This is expected to create an additional 20 000 black-owned retailers.

"These commitments will ensure that CCBA, which will be headquartered in South Africa, will support economic and social development in the country in a number of significant ways," the department said.

Agreement to boost national development

The merger parties agreed to a number of commitments that align closely with the South African government's national imperatives.

They have committed to increase the broad-based empowerment ownership of CCBSA to 20 percent and selling a 20 percent shareholding in Appletiser South Africa to appropriate black shareholders, who will be expected to participate actively in the business.

They have also committed to maintaining and growing the Appletiser South African production operations to serve the domestic market and as a base from which to export Appletiser to the rest of the continent and elsewhere in the world.

Minister Patel said the agreement lays the basis for deeper industrialisation in the South African economy.

"Employment creation and development of small businesses are a vital part of building a more inclusive economy. The commitments made by the merger parties will open access to cooler space in smaller spaza shops and retail outlets to competing brands," he said.

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