Heineken’s acquisition of South Africa’s Distell will see a new brewery for KwaZulu-Natal

Dutch beer maker Heineken’s acquisition of South African beverage producer Distell is set to see the company investing R5.5 billion into the economy.

According to the information landing through to BusinessTech Africa, is that the Competition Tribunal has heard that Heineken and Distell’s merger will boost the local economy.

This comes as the Tribunal started its hearings on Thursday from interested parties in the deal.

The Competition Commission said in a statement on its testimony to the Tribunal yesterday, that part of the commitments made from the deal included a R3.8 billion investment in a new brewery within five years in KwaZulu-Natal and the setting up of a R1.3 billion malt operation in the Western Cape.

Independent Media Online said regarding concerns of less access to retail infrastructure for smaller rivals, the commission discovered that the merged entity was unlikely to have the ability to foreclose small or new brands in the market.

“The newly merged company also undertook to support the government’s economic recovery plan by contributing R200 million over five years in a Localisation and Growth Fund, to support further localisation initiatives, focusing on the development of the small, medium, and micro enterprises,” reports the website.

“The new company would also invest R175m over five years to support around 1 000 tavern owners to create sustainable businesses. An innovation, research, and development hub for the African region based in South Africa would also be established.

“Heineken has to cough up R10bn investment to precede with Distell buy

On the commission and concerns by other stakeholders about possible retrenchments through the transaction, the commission said the parties had agreed to limit potential retrenchments to 230, or 5% of the total workforce, over a 10-year period, on a worst-case basis.”

Additionally, a new supplier development fund would also be established and it would contribute R400 million over five years for investment in SMMEs and historically disadvantaged persons which were suppliers to the company.

At the same time, this website has found that a brand new employee share ownership plans would be among the measures that would result in the new company attaining a B-BBEE effective ownership of no less than 15%.