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Business: SAB Ltd Announces Districtive R6 Billion BBBEE Transaction


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“We did not simply want to ‘tick the box’”, said Norman Adami, Managing Director of SAB Ltd. “We were determined to design a transaction that would work in delivering real benefits to genuinely broad-based constituencies. What we have on the table is a truly innovative transaction that, through the combination of participants, will deliver deep positive impact to the lives of many thousands of people in South Africa.”

The participants will include three key constituencies: SAB Ltd employees, black-owned beer and soft drink retailers and, through a new SAB Foundation, historically disadvantaged communities.

The transaction will target an estimated 60,000 new shareholders, of whom over 95% are estimated to be black individuals or black majority-owned enterprises, and will hold SAB Ltd shares through separate investment entities. After the ten-year transaction period, SAB Ltd shares will be exchanged for SABMiller shares. The transaction will equate to an effective 16% BBBEE transaction in terms of the BBBEE Codes of Good Practice.

The full terms of the transaction are expected to be finalised in November 2009 and the offer is expected to conclude in the first half of 2010.

A combination of key features makes the transaction distinctive:

1. The benefits of the transaction are specifically targeted at the major stakeholder groups who have played a meaningful role in SAB’s long-term business success.

2. The transaction is affordable and easily accessible for targeted stakeholders. Employees and the SAB Foundation are not required to pay for their shares, and retailers will be required to make only a small cash investment.

3. There is no external bank funding required, contributing significantly to the sustainability of the transaction.

4. A meaningful cash dividend stream is expected to be paid to all participants from year one for the whole of the ten-year transaction period, thereby delivering a significant economic benefit.

5. Through the new SAB Foundation, many historically disadvantaged South Africans will benefit from sustainable ongoing investment aimed at fostering entrepreneurship.

SAB believes its historically strong performance as a business has been closely related to its active role in South Africa’s social and economic development.

“What’s good for our nation is ultimately good for our business and this transaction is further evidence of our determination to play a progressive role in the context of 21st Century South Africa,” says Adami.

The company’s track record of empowerment initiatives, social investment and people development is testament to this commitment and approach.

“Our aspiration is to be a model corporate citizen in 21st Century South Africa and this transaction represents an important step in that direction. We’re proud of our track record as a long-standing supporter of black empowerment in South Africa, but this ownership initiative takes our commitment to a whole new level.”

Black-owned licensed liquor retailers, those who will have applied for liquor licences by the time of the offer closing in 2010, and black-owned registered customers of ABI will be eligible to participate and will contribute a small amount to purchase their shares. An extensive communications campaign, including guidance on both qualifying criteria and how to participate in this transaction, will commence in the near future.

The employee offer will include all black permanent employees of SAB, its subsidiaries and the SABMiller group who are permanently resident in South Africa. It will also include those permanent white employees who are not normally eligible for participation in the SABMiller group share incentive plans.

The SAB Foundation aims to widen the benefits to South Africa’s communities. Through a Board of Trustees and an independent Chairman, the SAB Foundation will focus on entrepreneurship amongst historically disadvantaged people, with a priority on women and youth. SAB’s scale and footprint enables it to make a difference throughout the country, especially in rural areas where the need is significant.

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