South Africa's Competition Tribunal on Tuesday conditionally approved a SABMiller and Coca-Cola deal to combine their African soft drink operations into what would be the continent's biggest Coke drinks bottler.
In a bid to fast-track the antitrust probe, SABMiller and Coca-Cola struck a deal with the South African government earlier this month that included an 800 million rand ($53 million) investment to support small businesses and a three-year freeze on layoffs.
The Competition Tribunal said the deal can go ahead subject to several conditions. These include the enlarged group limiting job cuts to 250, providing business skills to 25,000 black retailers and ensuring it purchases cans, glass, sugar, fruits and crates from local suppliers.
Brewer SABMiller, which is in the process of being taken over by Anheuser-Busch InBev, agreed in November 2014 to team up with Coke and the South African owners of local bottler Coca-Cola Sabco to create Coca-Cola Beverages Africa.
Coca-Cola Beverages Africa, which will account for 40 percent of all Coke volumes sold in Africa, will be headquartered in South Africa, its largest market. It will have annual sales of $2.9 billion and operations in 12 markets across Southern and East Africa.
The bottling deal was given a preliminary approval in December by South Africa's Competition Commission. The green light from the Tribunal removes the final hurdle in a drawn-out antitrust investigation.
South Africa has a history of taking its time over approving deals, partly because regulators have a public interest mandate to safeguard jobs in addition to ensuring there is competition.
The South African Competition Commission investigates deals for any antitrust issues and recommends remedies to the Competition Tribunal, which makes a final ruling.
Upon completion of the all-equity deal, Coke will own 11.3 percent of the venture, the Gutsche family that owns Coke Sabco 31.7 percent and SABMiller 57 percent.
Coke has the right to buy SABMiller's stake in the new venture in the event of a change of control at the brewer, sources have told Reuters. This could be triggered by the expected takeover of SABMiller by AB InBev.