Zim okays SABMiller, AB InBev merger

Prosper Ndlovu Business Editor
THE Competition and Tariff Commission (CTC) of Zimbabwe has approved SABMiller’s multi-billion dollar merger with the world’s biggest brewer AB InBev – with a set of conditions that include increasing export levels and supporting agriculture through contract farming and maintaining local brand production.

Delta Corporation Zimbabwe’s parent company, SABMiller was assimilated by its closest rival Anheuser-Busch InBev last year for $104bn (£68bn), in a record takeover deal for one of the biggest multinational firms.

Delta also owns a significant interest in Afdis, in which Distell also has shares. Afdis manufactures wines, spirits and ciders and is a value proposition for Delta as consumers switch to cheaper alternatives such as spirits.

“I wish to advise that the examination of the … merger has been finalised and the Commission approved the transaction … with conditions,” said Zimbabwe’s Competition and Tariff Commission acting director, Ellen Ruparanganda, in a letter to Delta Corporation and AB InBev dated July 1.

“Approval of the proposed transaction is subject to certain conditions concerning the business operations of Delta,” Ruparanganda is quoted saying by an online daily, Fin24.

The commission cautioned against possible retrenchments at the Zimbabwean listed brewer as one of the conditions for approval of the merger deal.

It also said Delta should be able to maintain its contract farming arrangements in Zimbabwe for the production and supply of sorghum and malt.

New owners AB InBev also have to make sure that Delta grows production of some local beer brands such as Zambezi Lager and Bohlingers, reported Fin24.

The conditions set by Zimbabwe also compel “Delta to seek to introduce new beer brands that can use locally produced raw materials to produce products for both the domestic and export markets” and to “work closely with Government agencies to help reduce the harmful use of alcohol”.

Other conditions include maintaining and improving the existing barley and sorghum contract farming schemes of Delta, ensuring the supply of malt by Delta to other users at reasonable, market-related terms, provided that Delta is not obliged to produce malt in excess of its own requirements.

Delta is also required to procure and use locally produced inputs for its production processes where possible, including barley, maize and sorghum.

The new owners would also be required to help “develop Delta capabilities in order to increase the level of exports” although the company was suffering from imported beer and soft drinks products.

This had forced Delta to cut its prices in a bid to compete well against the low priced imported products. Delta is also facing a stagnating Zimbabwean economy that has tipped into deflation.

Despite the challenges companies are facing in Zimbabwe, Delta is investing in expanded capacity for its products through new lines and new manufacturing plants. It is also one of the stocks that foreign investors are still interested in on the Zimbabwe Stock Exchange.

Zimbabwe stands to benefit immensely from the deal with possibility of millions of dollars in revenue and downstream economic impact if the set conditions are met.

Similarly South Africa has also endorsed the same merger with its own unique specific competition and public interest concerns.

Among these is the commitment by InBev to promoting growth, development and competition in South Africa and protecting the interests of the various stakeholders of SAB South Africa including – the South African employees, suppliers, distributors and consumers; the South African emerging farmers and commercial farmers; South African small businesses; and the South African society in general including complying with the letter and spirit of South African tax laws.

InBeV has also undertaken to make investments in agricultural development, enterprise development, promoting local manufacturing, exports and jobs as well as contributing to the improvement of society in general through sustainability and educational initiatives.