Belgian brewer Anheuser-Busch InBev may have won over peer SABMiller, but the $100 billion-plus deal could face delays in South Africa, where the now British company began selling its ubiquitous Castle Lager 120 years ago.
AB InBev's reputation as a cost slasher has alarmed local unions in a country with a 25 percent unemployment rate and where the government has a track record of delaying deals while imposing strict conditions to prevent job losses.
The world's two biggest brewers agreed last week to create a company that would make almost a third of the globe's beer. The Belgian company is by far the most profitable brewer, due to its austere operating culture and its controlling shareholders have a history of streamlining companies they take over.
"Given AB InBev's propensity to cut costs down to the bone, job cuts appear to be inevitable," Nic Norman-Smith, a fund manager at Lentus Asset Management, said.
But that might not be easy in South Africa, where the mandate for anti-trust authorities includes safe-guarding jobs.
The Congress of South African Unions (Cosatu) - part of the governing alliance with the ruling African National Congress - has already urged the government to not ratify a transaction that will create a company .
"It's highly likely the Competition Commission is certainly going to look over the deal with a fine-tooth comb for any signs of job losses," Norman-Smith said.
SABMiller, formed from the 2002 combination of South African Breweries and Miller Brewing, traces its roots to the dusty gold-prospecting fields around Johannesburg in the 1800s. It now operates in 80 countries but in South Africa, it still employs roughly 8,800 people, or nearly 13 percent of its total. It contributed around 16 billion rand ($1.2 billion) to tax revenue in 2014/15 fiscal year.
The government could "in the extreme" try and block the deal if it leads to a tax base erosion in Africa's most advanced economy, Lungisa Fuzile, director general at the National Treasury told Reuters.
"We subject those applications to objective criteria – the likely impact on capital account, the impact on the tax base and the possible complications," he said.
There's no precedent of South Africa blocking deals over concerns about tax erosion but Pretoria has blocked cross-border deals. In 2009, it scuppered a tie-up between telecoms companies MTN Group and Bharti Airtel tie-up, citing concern MTN could lose its national character.
Blocking the deal over national character is unlikely because SABMiller is now a British company, but delays are possible.
In 2011, the anti-trust regulator told U.S. company Wal-Mart Stores Inc not to cut jobs for two years following its acquisition of retailer Massmart - one of the key concessions unions and the government argued for during the hearings that delayed the implementation of the $2.4 billion deal by at least two months.
Trader and miner Glencore pushed back by nearly two months the completion of its acquisition of Xstrata, citing delays in South Africa, where unions pressed for job preservation.
"SABMiller was built on the back and by the hard work of the South African workers and they deserve to be heard and given assurances with respect to the security of their jobs," Cosatu's spokesman Sizwe Pamla said.
RAPID GROWTH, RISKY MARKETS
Under apartheid, which brought international sanctions on South African firms, SAB thrived as a domestic conglomerate with a near-monopoly on the beer market and interests in hotels, supermarkets, bars and furniture.
When sanctions were lifted and Nelson Mandela was released from prison in 1990, it began expanding internationally with a string of acquisitions in fast-growing but risky markets in central Europe, China and elsewhere in Africa.
After two decades of deals and the divestitures of its non-beer assets, SAB became the world's second-largest brewer, with brands like Peroni, Miller, Pilsner Urquell and Grolsch.
Even though it moved its headquarters and primary stock market listing from Johannesburg to London in 1999, the company retains a South African flavour. Four of its board members, including its chairman and CEO, are South African, while its 10-member executive committee includes seven South Africans.
Its brews like Castle Lager, Hansa Pilsner and Carling Black Label are synonymous with South Africa's blue skies, barbecues and obsession with football and rugby, helped by marketing campaigns linked to national holidays and sports teams.
Peter Attard Montalto, an emerging markets analyst at Nomura, said the government was unlikely to torpedo SABMiller and AB Inbev's blockbuster deal.
But he added: "The government is not afraid of perceptions of making things difficult for foreign investors. Can they delay it or make it more complicated? Quite possibly."