{"id":10035,"date":"2016-10-10T10:41:50","date_gmt":"2016-10-10T09:41:50","guid":{"rendered":"https:\/\/calloffthesearch.com\/?p=10035"},"modified":"2019-09-12T13:36:21","modified_gmt":"2019-09-12T12:36:21","slug":"state-transformed-sabmiller-deal-south-africans","status":"publish","type":"post","link":"https:\/\/calloffthesearch.com\/business\/state-transformed-sabmiller-deal-south-africans\/","title":{"rendered":"State transformed SABMiller deal for South Africans"},"content":{"rendered":"
\"Pic:Some bad news is emerging\u00a0around the\u00a0AB Inbev-SABMiller merger with the pound’s so-called flash-crash having\u00a0knocked quite a bit of value off the deal for South African shareholders. The transaction will complete at a significantly lower exchange rate than when it was agreed (something like R18 to the pound instead of R22).<\/div>\n

There is some sadness\u00a0for brand-conscious South Africans too, SAB was a brand that we were all proud of and now it is no more.<\/p>\n

So it is nice to note that there is a bright side too. The\u00a0deal, which is worth more than U.S. $100 billion, is\u00a0an excellent example of action by South Africa\u2019s competition authorities transforming a transaction that was set to benefit a group of shareholders into a deal designed to benefit society at large.<\/p>\n

\"ebrahimpatelrtp\"
Ebrahim Patel<\/figcaption><\/figure>\n

Talking to Call Off The Search\u00a0on the sidelines of the 10th annual Competition Law, Economics & Policy Conference in Cape Town, South Africa\u2019s Minister of Economic Development, Ebrahim Patel, said: \u201cWhen it was first announced \u2026 we said we were not excited about the deal.\u201d<\/p>\n

He said it was clear that shareholders would benefit from the transaction, but \u201cwe saw no value proposition for South Africa\u201d.<\/p>\n

Patel noted that the authorities\u2019 interest in a developmental outcome was further magnified by the fact that SABMiller already had an effective monopoly in South Africa.<\/p>\n

\u201cThey were by far the largest producer and distributor of beer in SA,\u201d he said. \u201cAB Inbev was simply taking over an existing monopoly.\u201d<\/p>\n

So the challenge was put to AB Inbev to re-engineer the deal in a way that there would be positive benefits for South Africa. Patel said a few areas, including employment, were identified.<\/p>\n

It was also decided, the minister added, that ways needed to be found to stimulate employment outside of the beer brewing sector.<\/p>\n

\u201cThat led to an agreement where the company is putting R1 billion on the table to develop local suppliers.\u201d<\/p>\n

Currently the beer brewing industry in South Africa is a net importer of hops and barley, the inputs that go into beer. This should soon change thanks to a challenge the competition authorities gave AB Inbev in place of a simple nod of approval for their merger.<\/p>\n

\"sabmillerrtp\"\u201cThe challenge we gave AB Inbev, the challenge they have accepted, is over the next few years to work to bring small-scale farmers into the supply chain,\u201d said Patel.<\/p>\n

As a result, AB Inbev has promised to bring 800 new small-scale farmers into the production of beer inputs. At the end of this period, the minister added, the aim is for South Africa to be a net exporter of the inputs that go into beer in the form of value-added malt.<\/p>\n

\u201cThe state needs to see mergers as opportunities to advance a broader programme,\u201d said Patel.<\/p>\n

He said the country\u2019s law specifically said you have to look at whether a proposal is pro-competitive. It also requires that questions be asked about whether a proposal would lead to growth, would it be good for development, would it benefit small business, local industries, employment?<\/p>\n

In the SAB Miller-AB Inbev case, Patel said, \u201cwe found an agreement that is significantly better than had there been simply an approval without conditions\u201d.<\/p>\n","protected":false},"excerpt":{"rendered":"

Some bad news is emerging\u00a0around the\u00a0AB Inbev-SABMiller merger with the pound’s so-called flash-crash having\u00a0knocked quite a bit of value off the deal for South African shareholders.
Continue Reading<\/a><\/p>\n","protected":false},"author":6,"featured_media":10062,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false}}},"categories":[408],"tags":[396],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/calloffthesearch.com\/wp-content\/uploads\/2016\/10\/SABMIllerRTP.jpg?fit=700%2C1050&quality=95&ssl=1","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/calloffthesearch.com\/wp-json\/wp\/v2\/posts\/10035"}],"collection":[{"href":"https:\/\/calloffthesearch.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/calloffthesearch.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/calloffthesearch.com\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/calloffthesearch.com\/wp-json\/wp\/v2\/comments?post=10035"}],"version-history":[{"count":1,"href":"https:\/\/calloffthesearch.com\/wp-json\/wp\/v2\/posts\/10035\/revisions"}],"predecessor-version":[{"id":11345,"href":"https:\/\/calloffthesearch.com\/wp-json\/wp\/v2\/posts\/10035\/revisions\/11345"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/calloffthesearch.com\/wp-json\/wp\/v2\/media\/10062"}],"wp:attachment":[{"href":"https:\/\/calloffthesearch.com\/wp-json\/wp\/v2\/media?parent=10035"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/calloffthesearch.com\/wp-json\/wp\/v2\/categories?post=10035"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/calloffthesearch.com\/wp-json\/wp\/v2\/tags?post=10035"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}