How ABInbev cashes in from KBL’s complex transactions

  • ABInbev cements control of KBL
  • Stands to benefit millions in Coca Cola takeover deal
  • De-lists 17% of Sechaba shares from BSE
  • De listing to reduce Sechaba market value

GAZETTE REPORTER

Anheuser-Busch InBev, the world’s largest beer brewer is determined to cement its control of local beer maker Sechaba Breweries Holdings and its value chain with its recent decision to delist almost 20 percent of Sechaba’s shares on the Botswana Stock Exchange Limited (BSEL).

Orange

Since the emergence of ABInbev, Sechaba as well as Kgalagadi Breweries Limited (KBL) have been engaged in a series of complex transaction, and it appears that ABInbev is determined to tighten its control on the Botswana beer brewing firm. Just recently, another huge deal reverberated through the exchange during the week under review after 22.3 million Sechaba shares worth P423.7million traded on the Botswana Stock Exchange Limited (BSEL).

In the deal, Sechaba simply bought its own shares,  worth 16.8 percent of Sechaba and will be delist in the near future. Since Sechaba bought shares from itself, it emerges it was a non-monetary transaction.

It emerges further that shareholders of Sechaba held an Extraordinary General Meeting (EGM) on the 27 September 2018 where a decision to approve such a transaction took place.  The EGM took place after the approval of the Botswana Competition Authority of the transaction as detailed in the Circular to Shareholders dated 3 August 2018.

ABInBev proposed to Sechaba shareholders that it be given 10.1 percent shares in KBL and Beverage Manufacturers Botswana (which bottles and distributes KBL’s non-alcoholic drinks division) and then in return Sechaba be allowed to buy back 16.8 percent of its own shares, and consequently delist them.  ABInBev now has majority stake in Sechaba and all its associates. ABInbev has 40 percent in Sechaba plus another direct 16.84 percent, making ABInBev the single largest shareholder at 56.8 percent. Government, through its investment arm, Botswana Development Corporation (BDC) has 24 percent while most of the remaining shares were held by pension funds, especially the Botswana Public Officers Pension Fund (BPOPF).

Sechaba Breweries Holdings Limited is an investment company listed on the Botswana Stock Exchange. Sechaba held 60 percent of shares in KBL, while ABInBev held 40 percent. The recently approved 10.1 percent shares which are to be transferred to ABInBev, means that the company will now directly control 50.1 percent of KBL, while Sechaba holds 49.9, a minority stake. There is a catch however, ABInBev also controls Sechaba, a company that has that 49.9 percent in KBL. In practical terms, ABInBev indirectly has more than 50.1 stake in KBL.
ABInBev will benefit in terms of voting rights at the board of directors. The company, which has also appointed its own executive management is in charge of the day to day operations, and will benefit more in dividends since it controls Sechaba and all its associates.

As if is not enough, ABInBev just after taking over Sechaba, moved to restructure the non-alcoholic beverages division so much that it had a controlling stake. Now that The Coca Cola Company, wants to buy out ABInBev in Coca Cola operations and ABInBev stands to pocket millions from the deal.

Before the ABInBev acquisition of SABMiller, The Coca Cola Company (TCCC) was in partnership with SABMiller, which had rights to bottle and distribute Coca Cola Company products in Africa. However, because ABInBev bottles and distributes Coca Cola’s arch rival Pepsi Cola in Latin Americ. Coca Cola  did not want any potential clash with Pepsi Cola through ABInBev’s relationship with the latter. ABInBev and Coca Cola then reached an agreement in principle for Coca Cola to acquire the non-alcoholic ready-to-drink business segment of KBL, subject to receipt of any requisite regulatory approvals and material consents. This meant that KBL will cease selling any product produced by the Coca Cola Company. It is owned 50.1 percent by ABInBev and 49.9 percent by Sechaba. Sechaba then set up Beverages Manufactures Botswana, which was owned 50.1 percent by ABInBev. The stake owned by ABInBev is the one which TCCC has been approved to purchase by Competition Authority.The authority announced last week that it has approved a proposed acquisition of 50.1 percent of the share capital of Beverage Manufacturers (Botswana) (Pty) Ltd by Strategic Alliance J.V. albeit with reservations. Strategic Alliance is indirectly controlled by The Coca Cola Company ( TCCC). Only ABInBev will benefit monetarily in this transaction, since TCCC will be buying out ABInBev completely from its 50.1 percent controlling stake in Beverages Manufacturers Botswana.