SABMiller Agrees to S. African Funds for Coca-Cola Bottle Merger

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.

The proposed merged entity will maintain total permanent employment at current levels for a period of three years, London-based brewer SABMiller said in a statement on Wednesday. One of the funds will be invested in agriculture development and the second to develop retailers owned by people discriminated against during apartheid, the company said.

“The agreement between the merger parties and the South African government is expected to expedite the approval process,” SABMiller said.

The deal echoes an agreement struck between Anheuser-Busch InBev NV to create a 1 billion rand fund that will support the South African beer industry and protect jobs in the country to help seal approval for its proposed takeover of SABMiller. Wal-Mart Stores Inc., the world’s biggest retailer, agreed to set up a 200 million-rand development fund when it acquired a controlling stake in Massmart Holdings Ltd. in 2011.

SABMiller and Coca-Cola first agreed to the bottling merger in November 2014, but have faced stumbling blocks while trying to gain anti-trust approval following the intervention of Economic Development Minister Ebrahim Patel. The new company will be headquartered in South Africa as part of the government agreement, SABMiller said.

A Competition Tribunal hearing into the deal is scheduled to start May 9.

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