AB InBev Agrees To Jobs Deal In South Africa To Ease SABMiller Takeover

AB InBev Agrees To Jobs Deal In South Africa To Ease SABMiller Takeover

Belgian brewer AB InBev has agreed to an involuntary job loss deal with the South African government as it seek an approval to its merger with SABMiller, which will make it the largest beer company in the World.

The deal, that includes a guarantee to maintain its total permanent employment levels in the country for five years after the takeover, is expected to ease the brewer’s efforts to secure required regulatory approval for its $100 billion-plus acquisition.

SABMiller employs more than 9,000 workers in South Africa.

InBev also agreed to set up as $70 million fund that will be used to support smallholder barley, hops and malt farmers who have been supplying SABMiller, The Telegraph reported.

These are “the most extensive merger-specific undertakings made to date in a large merger,” FT quoted Ebrahim Patel, South Africa’s economic development minister who previously resisted Walmart’s acquisition of a South African retailer Massmart, saying.

“In our view, they meet the requirements of the competition legislation,” Patel added.

The country’s Competition Commission has until May 5 to decide on the deal, having earlier sought deadline extensions which delayed the deal.

According to The Wall Street Journal, InBev is trying to avoid a protracted regulatory review in South Africa by striking a commitment agreement ahead of the decision.

South Africa’s emphasis on protecting jobs after a merger has contributed to lengthy reviews of other global deals such as the soft-drink bottling tie-up among Gutsche Family Investments, Coca-Cola Co. and SABMiller.

The Coca-Cola deal was agreed to in November 2014 but hasn’t been completed to date.

SABMiller, which was established in Johannesburg in 1895, has a huge presence in Africa with breweries in Botswana, Mozambique, Nigeria, South Africa, Sudan, Swaziland, Uganda, and Zimbabwe.

Africa is one of the fastest growing beer markets in the world due to its young population demographics. These has attracted global brewers to the continent as their sales in developed markets slows down.