SABMiller, AB InBev bid for merger approval
Isaac Pinielo | Friday April 8, 2016 15:34
The plea was made at a public hearing held at the CA offices in Gaborone, which was intended to allow the two parties to make oral representations to the authority with respect to the transaction.
The hearing was also meant to allow competitors and the general public to express their views on the acquisition.
Rizwan Desai, acting on behalf of the attorneys to the merging partners, stated that there are no competition concerns in the proposed transaction. Presenting joint submissions at the hearing, Desai said the economic rationale for the proposed transaction is to create the first truly global beer company by combining the merger parties’ largely complementary geographic footprints.
He said the combined entity will have access to key geographic regions with strong growth prospects, adding that the merger parties will benefit from the position of Africa as a critical driver of growth for the combined entity, building on the strong heritage of SABMiller in the region. “The combined entity will be able to provide consumers with more choice in new and existing markets around the world by combining the merger parties’ product portfolios of complementary global and local brands, and distribution systems in different countries,” said Desai.
He also said the combined entity will strive to have a positive impact in the markets in which it operates in by seeking synergies from local sourcing and production.
In addition, he said the combined entity will provide opportunities all along the supply chain, from farmers to brew masters, to truck drivers, to customers, as well as aspiring to the highest standards of corporate social responsibility. Following the consolidation, which he stated is reflective of the fast-moving consumer goods industry more generally, the combined entity will continue to face a substantial level of competition in domestic markets around the world.
“The competition will come from national and multi-national brewers, independent and craft brewers, and from the other alcoholic beverage segments, such as wine and spirits,” said Desai. According to the attorney, the proposed transaction will ultimately result in a broader range of choice for consumers in national markets around the world.
He said it will also allow for greater efficiencies through the exchange of best practices and skill sets in brewing, distribution and other areas. Desai also noted that the proposed transaction was initiated by an unsolicited bid for SABMiller from AB InBev. He added that the board of SABMiller intends to recommend the cash consideration under the proposed transaction to its shareholders as it believes that the cash offer by AB InBev represents an attractive premium for shareholders and will secure delivery of SABMiller’s long-term value potential.
He said the SABMiller board does not intend to make any recommendation with respect to the share consideration under the proposed transaction.
In a P1.2 trillion deal AB InBev, which is listed on Euronext Brussels Stock Exchange, Mexican Stock Exchange, Johannesburg Stock Exchange and the New York Stock Exchange, seeks to acquire the entire issued and to-be-issued share capital in SABMiller, which operates in Botswana through Kgalagadi Breweries. Post implementation of the proposed acquistition, AB InBev will own 100 percent of the issued share capital of SABMiller.
Both companies are active in the production, marketing and distribution of beer, non-alcoholic beer and soft drink products.
After listening to the submissions, the Mergers Review Committee chaired by CA chief executive officer, Thula Kaira said the decision of the transaction will be made in the shortest possible time.
“Normally it takes 30 days to make a decision,” he said. Furthermore, he said any interested parties not party to the proposed transaction should bring their queries to the committee in a period of five working days after the hearing.
Representing SABMiller was Shakti Wood of South African law firm, Bowman Gilfillan and SABMiller’s Luiza Moreira, while Desmond Rudman of Webber Wentzel, also a South African law firm, represented AB InBev alongside the company’s vice president compliance, Martim Della Valle.