Minister of Economic Development announces agreed approach with the Coca-Cola Company on maintaining and strengthening public interest commitments for Coca-Cola Beverages Africa
The Minister of Economic Development today announced that an agreement has been reached with The Coca-Cola Company on a package of conditions addressing public interest considerations in connection with its proposed acquisition of a 54.5% interest in Coca-Cola Beverages Africa (‘CCBA’) and the planned subsequent acquisition of the controlling interest in CCBA by a new controlling shareholder.. The commitments will be presented to the South African Competition Commission and Competition Tribunal as proposed public interest conditions for approvals of both proposed transactions, which were originally announced by The Coca-Cola Company on 21 December 2016.
Through this agreement, The Coca-Cola Company:
Re-affirmed its commitment to abide by all the merger conditions agreed with the South African Competition Authorities at the time of CCBA’s formation in 2016.
Agreed to ensure that the new controlling shareholder of CCBA, once finalised, will likewise agree to be bound by the CCBA Merger Conditions and the agreement reached with the South African Government.
Agreed to increase and maintain the black economic empowerment equity ownership at Coca-Cola Beverages South Africa to 30% by no later than 2021 in recognition of the imperative to drive transformation and inclusive economic growth in South Africa. This will replace the previously committed level of 20% to be implemented by 2021 and will include an appropriate level of worker/employee ownership.
Agreed to extend the commitment to maintain the level of CCBA employment in South Africa for a further three years from the conclusion of the planned acquisition of the controlling interest in CCBA by a new controlling shareholder.
In the Agreement, The Coca-Cola Company recognises the value of driving CCBA’s operations from South Africa and recommitted that CCBA will remain incorporated and tax resident in South Africa and its head-office will remain located in South Africa. It advised that it intends to take full advantage of South Africa’s deep capital markets, developed business infrastructure, and expansive local talent pool to maximise CCBA’s potential as a bottling operator. CCBA is committed to continue developing a pipeline of local South African talent for leadership positions at the management and corporate governance levels, with a particular focus on transformation.
In a separate statement issued today, The Coca-Cola Company provides details of its approach to finalizing selection of a controlling shareholder in CCBA.
This process will be open to South African and international prospective partners who have the necessary skill, capacity and commitment to drive The Coca-Cola Company’s vision for CCBA and who will be required to abide by the commitments made by The Coca-Cola Company to the South African Government.
The Coca-Cola Company advised that partner selection will take into consideration a number of factors including alignment with The Coca-Cola Company’s values; depth of management; track record of operating comparable operations across Africa; the financial capacity to establish ownership of the available CCBA shareholding which has been valued at USD $3.15 billion; and the ability to make long-term investments across CCBA’s current and future markets, and the commitment to maintain South Africa as an important part of the group in driving the development of CCBA on the continent and have a positive development impact in South Africa and the rest of the continent.
The South African Government advised of its preference to promote a South African controlling interest in companies deriving most of their revenue and profits from the domestic market.
The Coca-Cola Company will therefore test the interest and capacity in the South African market for a controlling operator of CCBA and will seriously consider South African parties on their merits as to their ability to meet the criteria, vision and policy preferences set out in the Agreement.
Minister of Economic Development Ebrahim Patel said: This agreement addresses key policy goals of protecting jobs and deepening participation by black South Africans as shareholders, professionals and workers in the company. It opens the door for South African companies to be considered as potential controlling operators of a large pan-African bottling operation. Africa should be more than a consumer market for global companies � its people should benefit from economic growth and corporate successes and this agreement can support the realisation of this objective.
In a separate announcement issued today, James Quincey, Chief Executive Officer of The Coca-Cola Company said: We are pleased to have reached this agreement with the South African Government which demonstrates our alignment with the South African Government’s national imperatives for inclusive social and economic development. Coca-Cola has been firmly committed to our business in Africa and supporting local communities since we first began operations in South Africa almost 90 years ago, and this agreement marks the latest important step in that journey.
Source: Government of South Africa