LONDON (ShareCast) - Brewing company SABMiller (LSE: SAB.L - news) is to give a 10% stake in its South African subsidiary to agencies
representing the black community in South Africa.
The deal, termed a “black economic empowerment transaction” by SABMiller, will involve the issue of shares in The South African Breweries (SAB) company worth around $750m (R6bn).
Participants in the transaction will include SAB's employees; black-owned licensed liquor retailers and liquor licence applicants, as well as black-owned customers of ABI, the soft drinks division of SAB; and the broader South African community through an SAB foundation.
A small cash investment will be required from the retailers participating in the scheme, but otherwise participation will be free. The participants are expected to receive dividends from their shares in the first year of ownership.
After holding the shares for 10 years participants will be required to exchange their shares in SAB for shares in the parent company, SABMiller.
The economic cost of the transaction to SABMiller, based on SABMiller's current assumptions and on market conditions as at Friday, 26 June 2009, is calculated at approximately US$220m (R1.8bn).
The arrangement will materially boost SAB’s compliance with the South African government's Codes of Good Practice on Black Economic Empowerment.
“We have structured this transaction to maximise benefits for all our stakeholders and to deliver genuine broad-based black economic empowerment,” said Graham Mackay, chief executive of SABMiller.
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