Coca-Cola’s plan to buy out brewer AB InBev in limbo as firm awaits regulatory approval

Coca-Cola’s plan to buy out brewer AB InBev from an African bottling joint venture, originally agreed to with SABMiller, may have to go through a second regulatory process just five months after the initial deal was concluded, because of the size of the two companies involved. SABMiller is the Africa’s largest Coca-Cola bottler, holding 57 per cent of Coco-Cola Beverages Africa, which accounts for 40 per cent of Coco-Cola’s African soft drink sales.

The combination of Coca-Cola and SABMiller’s bottling operations for non-alcoholic beverages in Southern and Eastern Africa was approved by South Africa’s competition authorities in May. This was 18 months after the tie-up was announced. After AB InBev completed its takeover of SABMiller earlierin October, Coca-Cola said it plans to trigger a change of control clause to buy SABMiller’s majority stake in the venture.

The size of the companies involved indicates that the deal will have to come back to the competition authorities, Hardin Ratshisusu, the Competition Commission’s acting deputy commissioner, said by phone on Friday. 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, Ratshisusu said.

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.

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