Ebrahim Patel welcomes Coca-Cola merger deal

Economic Development Minister, Ebrahim Patel, on Thursday welcomed commitments between the Coca-Cola Beverages Africa (CCBA) merger parties – SABMiller Plc, the Coca-Cola Company and Gutsche Family Investments – as well as the South African government.

According to the Department of Economic Development, the commitments would be recommended to the Competition Tribunal in connection with the proposed creation of Africa’s largest soft drink beverage bottling operation.

In a statement on Thursday, the department said the commitments addressed concerns regarding employment; access to retail cooler space for smaller competitors; localisation of production and inputs used in the production of Coca-Cola products and Appletiser brands; economic empowerment and the location of the headquarters.

“The merger parties undertook to ensure that the merged entity maintains its total permanent employment at current levels for a period of three years from the date of approval of the deal,” the department said.

The department said the merger parties agreed to a number of commitments that align closely with the South African government’s national imperatives.

The parties committed to increase the broad-based empowerment ownership of CCBSA to 20% and selling a 20% shareholding in Appletiser South Africa to appropriate black shareholders, who would be expected to participate actively in the business.

Patel, in a statement, said the agreement laid the basis for deeper industrialisation in the South African economy.

“Employment creation and development of small businesses are a vital part of building a more inclusive economy. The commitments made by the merger parties will open access to cooler space in smaller spaza shops and retail outlets to competing brands,” Patel said.

The parties also agreed that employees in the bargaining unit would not be subjected to involuntary retrenchment as a result of the merger and that retrenchments of senior management staff be limited.

The company agreed to invest R800-million to support enterprise development for two groups of entrepreneurs.

This was expected to create an additional 20 000 black-owned retailers, said the department.

“These commitments will ensure that CCBA, which will be headquartered in South Africa, will support economic and social development in the country in a number of significant ways,” the department added.