AB InBev cuts a path to overcome local hurdles

January 18, 2016, 5:01am

AB InBev CEO Carlos Brito at the Belgian brewing giant’s listing on the local exchange on Friday. The listing was the JSE’s first of this year. Picture: MARTIN RHODES on Business Day Live

By Hilary Joffe, Business Day Live

BELGIAN brewer Anheuser-Busch InBev has a plan that will attend to the concerns of all the key South African stakeholders about its acquisition of SABMiller — a plan that AB InBev CEO Carlos Brito hopes will help it fast-track the regulatory approvals the deal needs in SA.

Mr Brito, who was in Pretoria for meetings on Friday following AB InBev’s inward listing on the JSE, said the plan had not yet been submitted to the authorities. But the company had been in discussions to understand what was "top of mind" for South African stakeholders and was working with them to tackle all their concerns.

Mr Brito said although the deal was just a change of control in SA, where AB InBev has no operations and the two companies are not putting anything together, "legally SA is different in terms of merger deals — because you not only look at competition but also, more than usual, at public-interest issues".

The JSE took just 21 days to approve AB InBev’s inward listing under a new fast-track process it introduced in 2014. But gaining approval from South African competition authorities could take a lot longer.

Getting large deals done in SA has tended to become an increasingly lengthy and difficult process, in part because of the Competition Commission’s increased focus on public-interest issues such as employment and local suppliers when it scrutinises mergers, even when these raise no competition concerns.

The Department of Economic Development frequently weighs in with a shopping list of demands, competition lawyers say, as does the Public Investment Corporation.

SABMiller’s own proposed three-way merger of its soft-drink bottling operations to create Coca-Cola Beverages Africa was given the green light by the Competition Commission with a long string of conditions only last month, more than a year after the deal was announced.

It still has to go to the Competition Tribunal, which will hold a pre-hearing on the matter this week. The conditions include buying inputs from domestic suppliers and establishing multimillion-rand funds to develop black-owned retailers and support developing farmers and small suppliers.

Getting regulatory approval for AB InBev’s proposed acquisition of SABMiller in SA, the US, China and the European Union is key to closing the deal that Mr Brito expects will happen in the second half of this year.

South African investors will now be able to buy shares directly in AB InBev without using their foreign exchange allowances. The listing was the JSE’s first of this year.

At the listing ceremony on Friday, JSE CEO Nicky Newton King said: "It is not every day that we get to host the CEO of one of the world’s largest consumer goods companies or of the world’s largest brewer."

Mr Brito said the listing showed AB InBev had come to stay. "We want to be part of the fabric of the community."

Although AB InBev has committed to deriving synergies from the merger, Mr Brito emphasised that it had committed in its filing to the Competition Commission that there would be no retrenchments in SA as a result of the transaction, because there was no overlap. "Efficiency can be obtained in many different ways, as we exchange best practices," he said.

The AB InBev share opened at R1,938 and finished the day marginally higher at R1,944. The share ranged between a low of R1,922 and a high of R1,960.

Volume was 572,531 shares traded — equivalent to a value of well over R10bn.

The company ended its debut day with a market capitalisation of more than R3.1-trillion, which is almost twice the market cap of SABMiller.