The Competition Commission’s conditional approval of Anheuser-Busch InBev’s acquisition of SABMiller brings closure of the transaction tantalisingly close to meeting the August 12 deadline when SABMiller is scheduled to pay out its final dividend of 65p a share.
If the deal is completed earlier‚ AB InBev will bank the dividend. If not‚ SABMiller’s present shareholders will.
Competition lawyers said a Competition Tribunal hearing could be held within a week or two and completed within a day or two.
Katishi Masemola‚ the general secretary of the Food and Allied Workers Union (Fawu)‚ failed to secure any support from the commission for his demands relating to the Zenzele empowerment scheme and is not expected to be able to delay proceedings at the tribunal.
AB InBev has committed to the continuation of the Zenzele scheme until 2020. However‚ Masemola has dismissed AB InBev’s offer to pay out early dividends‚ arguing that this represents little more than a loan that his members will be required to repay.
To date‚ despite much discussion‚ the merging parties and Fawu have been unable to hammer out a compromise.
Masemola’s determination in the matter reflects his concern that while AB InBev has undertaken to secure employment numbers‚ the quality of that employment might deteriorate under AB InBev’s cost-cutting management style.
AB InBev has further undertaken to present an outline of a new black economic empowerment plan that will replace Zenzele when it matures in 2020.
Masemola said he “largely supported” the agreement between the merging parties and the government but was preparing to continue to fight for a better deal on the Zenzele scheme.
As the dispute over the Zenzele scheme is deemed to be a shareholder matter‚ Masemola’s fight will not be able to delay the implementation of the merger.
A mid-June clearance from the tribunal and the go-ahead from China and US authorities could provide just enough time for the necessary documentation and shareholder meetings to be finalised before August 12.
However‚ it would be a stretch. The tightness of the timetable prompted the merging parties to concede last month‚ when SABMiller released its results‚ that they did not expect the deal to close before August 12.
In response to the commission’s recommendation‚ AB InBev said it believed it was well on track to secure the necessary regulatory approvals “that will allow for closing in the second half of 2016”.
On Tuesday‚ following five months of deliberation‚ the commission announced it was recommending the approval of the $108-billion merger.
In addition to a host of conditions related to the public interest imposed by the economic development minister‚ the commission has obliged SABMiller to sell its 27% stake in wine‚ cider and spirits producer Distell within three years of the merger’s completion.
It has also required that the merged entity provide 10% of its refrigeration space in retail outlets and taverns to the beer products of smaller competitors.
The disposal of the Distell stake‚ which had been signalled by a number of analysts‚ will result in the unwinding of a contrived control structure that was put in place in the late 1970s. Ahead of this disposal‚ SABMiller‚ Capevin and Remgro were joint controlling shareholders in Distell.
Preemptive agreements dating back to the creation of Distell mean Capevin and Remgro are at the head of the queue to take up this attractive investment. But with Capevin’s limited access to funding it is likely that Remgro‚ which holds 15.6% of Capevin‚ will take up the largest portion of SABMiller’s Distell stake.
At Tuesday’s share price of R153‚ Distell has a market cap of more than R33-billion‚ putting a value on SABMiller’s stake of just less than R9-billion.
Ironically‚ the unwinding of the Distell control structure will be the result of the first significant change in the South African beer market since 1979 when Distell was created.
In that year Remgro abandoned its short-lived ambitions to secure a footing in the local beer market. As part of the agreement between the major industry players of the time‚ Distell’s ownership was carved up between KWV‚ Remgro and SAB.
Promising signs for merger
If the deal is completed earlier‚ AB InBev will bank the dividend. If not‚ SABMiller’s present shareholders will.
Competition lawyers said a Competition Tribunal hearing could be held within a week or two and completed within a day or two.
Katishi Masemola‚ the general secretary of the Food and Allied Workers Union (Fawu)‚ failed to secure any support from the commission for his demands relating to the Zenzele empowerment scheme and is not expected to be able to delay proceedings at the tribunal.
AB InBev has committed to the continuation of the Zenzele scheme until 2020. However‚ Masemola has dismissed AB InBev’s offer to pay out early dividends‚ arguing that this represents little more than a loan that his members will be required to repay.
To date‚ despite much discussion‚ the merging parties and Fawu have been unable to hammer out a compromise.
Masemola’s determination in the matter reflects his concern that while AB InBev has undertaken to secure employment numbers‚ the quality of that employment might deteriorate under AB InBev’s cost-cutting management style.
AB InBev has further undertaken to present an outline of a new black economic empowerment plan that will replace Zenzele when it matures in 2020.
Masemola said he “largely supported” the agreement between the merging parties and the government but was preparing to continue to fight for a better deal on the Zenzele scheme.
As the dispute over the Zenzele scheme is deemed to be a shareholder matter‚ Masemola’s fight will not be able to delay the implementation of the merger.
A mid-June clearance from the tribunal and the go-ahead from China and US authorities could provide just enough time for the necessary documentation and shareholder meetings to be finalised before August 12.
However‚ it would be a stretch. The tightness of the timetable prompted the merging parties to concede last month‚ when SABMiller released its results‚ that they did not expect the deal to close before August 12.
In response to the commission’s recommendation‚ AB InBev said it believed it was well on track to secure the necessary regulatory approvals “that will allow for closing in the second half of 2016”.
On Tuesday‚ following five months of deliberation‚ the commission announced it was recommending the approval of the $108-billion merger.
In addition to a host of conditions related to the public interest imposed by the economic development minister‚ the commission has obliged SABMiller to sell its 27% stake in wine‚ cider and spirits producer Distell within three years of the merger’s completion.
It has also required that the merged entity provide 10% of its refrigeration space in retail outlets and taverns to the beer products of smaller competitors.
The disposal of the Distell stake‚ which had been signalled by a number of analysts‚ will result in the unwinding of a contrived control structure that was put in place in the late 1970s. Ahead of this disposal‚ SABMiller‚ Capevin and Remgro were joint controlling shareholders in Distell.
Preemptive agreements dating back to the creation of Distell mean Capevin and Remgro are at the head of the queue to take up this attractive investment. But with Capevin’s limited access to funding it is likely that Remgro‚ which holds 15.6% of Capevin‚ will take up the largest portion of SABMiller’s Distell stake.
At Tuesday’s share price of R153‚ Distell has a market cap of more than R33-billion‚ putting a value on SABMiller’s stake of just less than R9-billion.
Ironically‚ the unwinding of the Distell control structure will be the result of the first significant change in the South African beer market since 1979 when Distell was created.
In that year Remgro abandoned its short-lived ambitions to secure a footing in the local beer market. As part of the agreement between the major industry players of the time‚ Distell’s ownership was carved up between KWV‚ Remgro and SAB.
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