South Africa conditions Heineken's takeover of Distell


South Africa
Glasses of Heineken beer are seen at a restaurant in Hanoi, Vietnam May 30, 2019. Picture taken May 30, 2019. REUTERS/Kham

The Competition Commission of South Africa authorized Heineken's acquisition of wine and cider producer Distell Group on the condition that the amalgamated entity invests more than 10 billion rands ($578 million) in the country over the next five years.

The Commission announced on Friday that the investment would be used to sustain and expand the total production capacity of its South African activities and facilities.

In November, the Dutch brewer revealed its intention to acquire Distell and Namibia Breweries Ltd to build a $4 billion beverages conglomerate in southern Africa.

The Commission suggested that the Competition Tribunal, which makes the ultimate judgment, conditionally allow the combination.

It determined that the proposed transaction is likely to substantially prevent or lessen competition in the relevant markets, as the merged entity will be a dominant supplier of flavored alcoholic beverages with a market share greater than 65 percent and the largest supplier of ciders in South Africa.

"To address the competition concerns arising from the transaction, Heineken has committed to divest its Strongbow business in South Africa and other SACU (Southern African Customs Union) countries," the Commission stated.

In addition, the Commission and the merging parties have agreed to develop an Employee Share Ownership Scheme that will transfer more than 3 billion rands in equity to employees of the South African operations of the amalgamated entity.

Other investments include the establishment of a 400 million rand supplier development fund to invest in small businesses, a 200 million rand contribution to promote localization and growth initiatives within the country, and a South African innovation, research, and development hub for the African region.

To resolve employment concerns in South Africa, the merging parties have promised to maintain employee headcount for five years following the merger and not to lay off any employees below defined managerial grades, according to the statement.

Publish : 2022-09-11 12:15:00

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