AB InBev Will Speed Distell Share Sale to Secure SABMillerby
Stake to be sold quicker than 3 years recommended by regulator
South Africa’s Competition Tribunal conducting deal hearing
Anheuser-Busch InBev NV agreed to sell SABMiller Plc’s stake in South African drinks maker Distell Group Ltd. over a shorter time period than the three years recommended by the country’s antitrust authority, an attempt to smooth the path toward regulatory approval for the brewing industry’s biggest-ever deal.
“What was agreed was a shorter time period to effect the divestment,” Frank Snyckers, an advocate for AB InBev and SABMiller, said in an interview in Pretoria on Wednesday. Further details of the commitment are confidential, he said during the first day of a Competition Tribunal hearing into the takeover.
Distell had earlier told the Tribunal that a three-year timeframe to offload the 26 percent stake would create uncertainty for the Stellenbosch, South Africa-based company, which is listed in Johannesburg. It would be in the best interest of Distell and the public if AB InBev disposed of the stake “reasonably quickly,” said the company’s lawyer, Jeremy Gauntlett.
South Africa’s Competition Commission recommended AB InBev’s $107 billion acquisition of SABMiller be approved earlier this month, with conditions such as the sale of the $624 million Distell stake. London-based SABMiller is the second-largest shareholder in the maker of Amarula liquor and Klipdrift brandy, behind billionaire Johann Rupert’s Remgro Ltd., which owns 53 percent. Distell shares gained 1.7 percent to 158.75 rand by the close in Johannesburg, valuing the company at 35 billion rand ($2.4 billion).
AB InBev is trying to get regulatory approval for the takeover around the world, and is poised to get the go-ahead from the the U.S. Justice Department and China’s Ministry of Commerce, according to people familiar with the matter. A key date in the process is Aug. 12, when SABMiller is scheduled to pay its dividend. AB InBev will receive the payout if the deal is completed by then. SABMiller, the brewer of Castle and Grolsch lagers, traces its roots back to 19th century Johannesburg.
The acquisition could deliver as much as $18.3 billion in foreign direct investment to the South African economy, Snyckers told the Competition Tribunal. FDI in the country slumped to about $1.5 billion last year, according to Reserve Bank data, the lowest since 2006.
There’s an “undeniable benefit to the economy of the largest foreign direct investment effect in the history of this country,” Snyckers said.
The Competition Tribunal hearing into the AB InBev-SABMiller deal is scheduled to run until June 24. South Africa’s Food and Allied Workers Union, which wants an SABMiller employee-share program wound up early and replaced with a new plan, will give evidence on Thursday, General Secretary Katishi Masemola said.
Heineken NV also made submissions to the Tribunal, asking for changes to conditions including those related to space allocations in retail outlets. Other merger conditions recommended by the Competition Commission include protecting jobs and setting up a 1-billion rand fund to support local farmers.