Wednesday, June 02, 2021

Deal Outline

We advised The South African Breweries (SAB) and Anheuser-Busch InBev (AB InBev) on the unwind of their existing B-BBEE transaction – SAB Zenzele, which was concluded in 2010 (2010 Empowerment Transaction) – and the launch of a new B-BBEE transaction – SAB Zenzele Kabili (New Empowerment Transaction).

The 2010 Empowerment Transaction benefited approximately 29 000 qualifying retailers, 13 000 SAB employees and The SAB Foundation. The unwind of this transaction is anticipated to deliver ZAR 9,7 billion to participants and will be the highest B-BBEE value creation in the fast-moving consumer goods (FMCG) industry to date.

The New Empowerment Transaction was implemented through a new company, SAB Zenzele Kabili, that owns ZAR 5,4 billion worth of AB-InBev shares and is listed on the Empowerment Segment of the Johannesburg Stock Exchange (JSE).

Retailer shareholders who participated in the 2010 Empowerment Transaction were invited to cede their rights and entitlement to AB InBev shares on the unwind of the 2010 Empowerment Transaction in exchange for SAB Zenzele Kabili shares of proportional value. The listing of these shares will create liquidity and allow SAB Zenzele Kabili shareholders to trade their shares with other BEE investors from the outset.

This matter is crucial to the conduct of SAB’s business in South Africa for a number of reasons, including to allow SAB to obtain liquor licences, to incentivise staff and to encourage retailer loyalty. 

Potential value creation 

SAB provided vendor financing to SAB Zenzele Kabili on favourable terms to the value of ZAR 2,97 billion worth of AB InBev shares. In addition, a new employee share ownership plan (ESOP), registered for the benefit of employees of the SAB group, transferred to SAB Zenzele Kabili the equivalent of ZAR 600 million worth of AB InBev Shares and, as consideration, SAB Zenzele Kabili issued SAB Zenzele Kabili Ordinary Shares of proportional value to the new ESOP.

As an incentive to SAB Zenzele retailer shareholders to participate in the New Empowerment Transaction, SAB contributed another ZAR 811 million worth of AB InBev shares to SAB Zenzele Kabili (Discount Shares). The Discount Shares were in addition to the AB InBev Shares that were acquired by SAB Zenzele Kabili under the SAB Zenzele Scheme and the Reinvestment Offer.

As a result, following implementation of the New Empowerment Transaction, the SAB Zenzele Retailer Shareholders will have exposure, through SAB Zenzele Kabili, to a greater number of AB InBev Shares than they would have had.

Execution complexity

The New Empowerment Transaction involved a scheme of arrangement in accordance with the Takeover Regulations; an offer to the public in accordance with the Companies Act; and listing on the JSE in accordance with the JSE Listings Requirements.

It required engagement with various regulators including the Takeover Regulation Panel (TRP), the Companies and Intellectual Properties Commission (CIPC), the JSE, the Financial Surveillance Department of the South African Reserve Bank (SARB) and the BEE Commission. Our team led these engagements and guided the client through this complicated regulatory terrain.

We also drew on the expertise of our tax team to advise on the complex issues around optimising the tax impact of the transaction for all relevant parties. As AB InBev shares are an integral part of the New Empowerment Transaction, we worked closely with local counsel in Belgium (where AB InBev is incorporated and listed) to ensure that the transaction satisfied Belgium corporate and securities law requirements.

Ultimately, this transaction is a great example of one of Bowmans’ key strengths: effective collaboration to bring about a sophisticated solution to client problems/requirements.

Our Role 

Our team was led by Charles Douglas (co-head of M&A) and comprised more than 20 lawyers across a range of specialisations including equity capital markets, corporate and commercial, tax, exchange control, BEE regulatory, and banking and finance.

Some of the key members of the core team included Ryan Wessels and Sibonelo Mdluli (partners who led on the public M&A, capital markets and securities law aspects). Tholi Gcabashe (co-head of M&A) assisted with the structuring and corporate aspects. Barry Garven and Kelly Wright (partners) provided advice on tax and exchange control. Jan Kruger and Jason Wilkinson (partners) advised on the financing and preference share elements of the transaction.

Our work involved:

  • providing input on the structuring of the New Empowerment Transaction;
  • drafting, negotiating and finalising the various agreements and ancillary documents required to unwind the 2010 Empowerment Transaction and implement the New Empowerment Transaction.
  • drafting and finalising the public documents posted to participants in the 2010 Empowerment Transaction, notably a scheme of arrangement circular and prospectus and corresponding announcements;
  • obtaining the necessary regulatory approvals for the New Empowerment Transaction by corresponding with other deal advisors and regulators, including the CIPC, JSE, SARB and TRP; and
  • providing overall support to the client and other advisors in unwinding the 2010 Empowerment Transaction and launching the New Empowerment Transaction.


The ZAR 9,7 billion that will be delivered to participants in the first phase of the transaction, partial unwind, is regarded as the highest B-BEEE value creation in the South African FMCG industry to date.

In the second phase, structuring and implementation, the new company implementing the New Empowerment Transaction, SAB Zenzele Kabili, will own ZAR 5,4 billion worth of AB InBev shares and was listed on the Empowerment Segment of the JSE on 28 May 2021.

The New Empowerment Transaction is unique in that it will facilitate liquidity and broaden ownership to other BEE investors on day one: Retailer Shareholders are not locked in for a period after the implementation of the transaction – they are free to sell their SAB Zenzele Kabili shares at any time and realise immediate value.

At the same time, SAB Zenzele Kabili’s listing on the JSE ensures that the BEE benefits of New Empowerment Transaction are ever-green. This transaction is thus beneficial both to the investors of SAB Zenzele Kabili and to SAB and AB InBev.