Business Day

Union hopes to land 18% stake in Coca-Cola bottler

- Ann Crotty Writer at Large crottya@businessli­ve.co.za

Katishi Masemola, general secretary of the Food and Allied Workers’ Union, is hoping his members will bag an 18% stake in Coca-Cola Beverage South Africa (CCBSA), the largest Coca-Cola bottler in SA.

The stake, which would be worth several hundred millions of rand, would have to be vendor-financed.

Masemola told the Competitio­n Tribunal on Wednesday in Pretoria that employees of CCBSA should get this stake as part of the employee share ownership programme that is to be set up in terms of the conditions attached to approval of The Coca-Cola Company’s (TCCC’s) acquisitio­n of Anheuser Busch Inbev’s (formerly SABMiller’s) 57% stake in CCBA.

CCBA was establishe­d in 2016, following a drawn-out merger process initiated in 2014. Its bottling operations cover SA, Namibia, Kenya, Uganda, Tanzania, Ethiopia, Mozambique, Ghana, Mayotte and Comoros. The South African bottling operation (CCBSA) is the largest.

On Wednesday, the tribunal conditiona­lly approved the $3.4bn transactio­n, which was prompted by Anheuser Busch Inbev’s acquisitio­n of SABMiller in October 2016.

The deal increases TCCC’s holding in CCBA, which is the 10th-largest Coca-Cola bottler in the world, from 11% to 68%.

The Gutsche Family Investment­s, a private entity, holds the remaining 31.7%.

Masemola told Business Day that while the merging parties agreed to employees being allocated shares, “they couldn’t agree to the quantum”.

The Gutsche Family and TCCC indicated that the quantum could only be determined once they had decided who their black economic empowermen­t partner would be.

They did not give any indication of who their partner might be but have said they were talking to several parties.

In addition to talking to potential black economic empowermen­t parties interested in a stake in the South African bottling operation, TCCC has said it is engaging with other South African and internatio­nal parties interested in acquiring a controllin­g interest in CCBA.

Earlier this year, TCCC said it acknowledg­ed the government’s preference for promoting a South African controllin­g interest in companies deriving most of their revenue and profit from the domestic market and that it would “seriously consider South African parties”. In June, in a bid to minimise delays before the tribunal, TCCC undertook to increase its black economic empowermen­t equity stake in CCBSA to 30% by no later than 2021.

CCBSA, which had previously committed to a 20% black economic empowermen­t equity stake, said the 30% holding would include “an appropriat­e level of worker/ employee ownership”.

The employee share ownership programme stake had to be independen­t of the black economic empowermen­t holding, Masemola said. Anything less than 10% would be unacceptab­le to employees, he added.

Masemola also hoped that the benefits to employees would be better than those offered by South African Breweries’ Zanzele scheme.

About “75% of dividends were used to repay the debt and 25% went to participan­ts of the scheme, we would like to see much more than 25% from CCBSA dividends,” he said.

While this week’s decision by the tribunal brings an end to three years of engagement with the competitio­n authoritie­s, it might only be temporary relief for TCCC.

CCBA and TCCC could be back before the competitio­n authoritie­s if a controllin­g stake is sold to another party.

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