SAB Sabmiller

By Tripp Mickle 

Anheuser-Busch InBev NV on Tuesday cleared a regulatory hurdle in South Africa, gaining approval of its acquisition of SABMiller PLC from South Africa's Competition Commission.

The deal now goes to South Africa's Competition Tribunal for final clearance.

South Africa is one of four markets where AB InBev, the world's largest brewer, must gain regulatory approval before it can close its roughly $108 billion takeover of rival SABMiller. Last week, Europe became the first of those four marketsto approve the deal. Regulators in China and the U.S. are still reviewing the merger.

AB InBev called the approval granted by South Africa's Competition Commission "an important milestone." The company said that it is "well on track to secure necessary regulatory approvals" to close its acquisition of SABMiller in the second half of 2016. The deal will create the world's largest brewer, with a nearly 30% market share.

The South Africa Competition Commission's approval came a little over a month after AB InBev pledged to create a $69 million investment fund in South Africa and promised that no employees in the country would lose their jobs as a result of the merger. In April, AB InBev said the investment fund would support farmers, local manufacturing, jobs and the reduction of harmful alcohol use in South Africa.

Despite those pledges from AB InBev, the commission put some conditions on its approval of the AB InBev-SABMiller deal. The most significant of those was a pledge that AB InBev will divest SABMiller's stake in Distell Group Ltd., South Africa's largest cider producer. The commission said the sale would come within three years of completion of the AB InBev-SABMiller combination.

In addition to that condition, AB InBev pledged to provide competitors with metal bottle caps and work to provide 10% of retailer cooler space to local craft brewers. The merger would give AB InBev ownership interest in Coleus Packaging, which is South Africa's only producer of metal bottle caps. The commission said AB InBev agreed to supply caps to other companies for a period of five years after the merger.

The Competition Commission also recommended that AB InBev continue to supply hops and malt to small beer producers.

The South Africa Competition Commission also raised concerns about AB InBev's bottling operations with PepsiCo Inc. in Latin America and the potential competitive issues that would arise after acquiring SABMiller's interest in Coca-Cola Co. bottling operations in South Africa. To address that concern, South African regulators said AB InBev ensured that employees involved in bottling operations for Coca-Cola wouldn't also be involved in bottling operations for Pepsi, and there would be "no sharing of commercially sensitive information between the two."

Write to Tripp Mickle at Tripp.Mickle@wsj.com

(END) Dow Jones Newswires

May 31, 2016 13:11 ET (17:11 GMT)

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