CCBA gives R800m boost to business

SABMiller Plc and Coca-Cola Co. agreed with the South African government to protect jobs and set up two 400 million-rand ($27 million) development funds in order to secure antitrust approval for the creation of bottling operations for non-alcoholic beverages in southern and eastern Africa.Photo Supplied

SABMiller Plc and Coca-Cola Co. agreed with the South African government to protect jobs and set up two 400 million-rand ($27 million) development funds in order to secure antitrust approval for the creation of bottling operations for non-alcoholic beverages in southern and eastern Africa.Photo Supplied

Published May 5, 2016

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Johannesburg - SABMiller and Coca-Cola yesterday agreed to invest R800 million to support small South African businesses in a deal with the government to secure antitrust approval to create Africa’s biggest soft drink bottling operation.

Read: SABMiller, Coca-Cola agree concessions with SA

Jobs would be retained in South African plants three years post the approval of the merger and the shedding of senior management posts would be limited, SABMiller and Coca-Cola said.

Teamed up

The deal between the two companies has been in the pipeline since November 2014, when SABMiller, which is on the verge of being taken over by Anheuser-Busch (AB) InBev, teamed up with Coke to create Coca-Cola Beverages Africa (CCBA).

International companies have faced stumbling blocks trying to gain antitrust approval in South Africa following the intervention of Economic Development Minister Ebrahim Patel.

Last month, AB InBev agreed to create a R1 billion fund to support the local beer industry and protect jobs in a bid to secure approval for its proposed $105bn (R1.5 trillion) takeover of SABMiller.

The creation of CCBA will combine six businesses across Africa’s soft drinks industry with annual sales estimated to be $2.9bn.

More than half of the 14 000 plus employees across Africa will be based in the country, with the parties undertaking to ensure that the merged entity maintains its total permanent employment in South Africa at current levels for three years from the date of approval.

They also agreed set up two development funds – R400m for enterprise development in the agricultural value chain and another R400m to develop downstream distribution and retail capabilities with associated skills development to create an additional 20 000 black-owned retailers.

SABMiller’s chief executive, Alan Clark, said he hoped there was a clear path to the conclusion of the transaction and the creation of the CCBA.

James Quincey, the president and chief operating officer of the Coca-Cola Company, said the creation of Coca-Cola’s largest bottling partner in Africa would strengthen its business.

Committed

“Coca-Cola has been firmly committed to our business in Africa and supporting local communities since we first began operations in South Africa almost 90 years ago, and this agreement marks the latest important step in that journey,” Quincey said.

The Competition Commission gave preliminary approval of the merger in December on condition that job cuts were limited to 250 and that it ensured cans, glass and sugar were bought from local suppliers. A three-week Competition Tribunal hearing on the merger is scheduled to start on Monday.

Katishi Masemola, the general secretary of the Food and Allied Workers Union (Fawu), the biggest union at SABMiller, said two underlying issues had to be addressed during the three-week Competition Tribunal hearing. He said these included the harmonisation of standards in wages, working conditions and benefits in order to create one set of standards for all employees.

“If a fork lifter earns a certain amount at one company, we expect that all the salaries should be equal across the board once the companies come together,” Masemola said.

He said the second thorny issue was SABMiller’s employee share ownership scheme, Zenzele. He said all workers, not just those from SABMiller, should benefit.

“We are saying workers from other bottling company into the big company must equally be included in this… scheme or alternatively a new scheme must be set up,” Masemola said.

An SABMiller spokesman said the parties met with Fawu this week as part of discussions with the trade union that had been ongoing for many months, and were fully open to discussions. “The parties are confident that the creation of CCBA will unlock significant job creation and investment benefits for the country.”

CCBA, to be headquartered in South Africa, is expected to be Africa’s largest Coca-Cola bottler, serving 12 countries, and accounting for 40 percent of all volumes on the continent.

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