Key takeaways:
- South Africa’s Competition Commission has recommended approval of Coca-Cola HBC’s takeover of Coca-Cola Beverages Africa
- Coca-Cola HBC agreed in October to buy a combined 75% stake in CCBA for $2.6 billion
- Both companies have committed to a job protection moratorium and a secondary listing on the Johannesburg Stock Exchange as conditions of the deal
South Africa’s competition watchdog has recommended approval of Coca-Cola HBC’s planned takeover of Coca-Cola Beverages Africa, clearing a key hurdle for the $2.6 billion transaction.
The Competition Commission of South Africa announced the recommendation in a statement on July 13, referring the deal to the country’s Competition Tribunal for final sign-off.
“The Commission is of the view that the proposed transaction is unlikely to substantially lessen or prevent competition in any market,” the commission said.
UK-listed Coca-Cola HBC struck the deal in October to acquire a combined 75% stake in CCBA from The Coca-Cola Company and Gutsche Family Investments, valuing the business at approximately R56 billion.
The commission said that because of public interest considerations tied to the deal, both companies have agreed to a set of conditions, including a pledge not to make any jobs redundant in South Africa for a defined moratorium period.
A commission spokesperson declined to disclose the length of that period, saying the information remains confidential at this stage.
Conditions attached to secure approval
Beyond the jobs pledge, both companies have committed to investing in developing the downstream distribution and retail side of their South African business, the commission said.
They have also agreed to pursue a secondary inward listing of Coca-Cola HBC on the Johannesburg Stock Exchange, though the commission’s spokesperson said the timeline for that listing has also been kept confidential.
The deal must still clear South Africa’s Competition Tribunal before it can close. Large mergers typically face a hearing following the commission’s referral, after which the tribunal issues a final decision.
A bigger footprint across Africa
Coca-Cola HBC said when it announced the deal in October that the acquisition would materially expand its presence on the continent, adding 14 new African markets to its operations, including South Africa, Ethiopia and Kenya.
The move would give the Swiss-based bottler a substantially larger footprint across Africa’s beverage market, building on its existing operations across Europe and parts of Asia.
The transaction reflects a broader consolidation trend within the global Coca-Cola bottling system, as regional bottlers increasingly combine operations to gain scale and streamline distribution across emerging markets.
CCBA itself was formed through a prior merger of several African bottling operations and has operated as one of the largest Coca-Cola bottlers on the continent, supplying markets across sub-Saharan Africa.
