Coca-Cola Beverages South Africa increases employee stake in business boosting BEE status

SOUTH AFRICA – Coca-Cola Beverages South Africa (CCBSA) has announced that it will transfer an additional 10% of shares to its employees, in a move aimed to enhance its black economic empowerment (BEE) status and meet its revised merger conditions.

This comes after CCBSA together with the Department of Trade, Industry and Competition (the dtic) and the Competition Authorities, reached an agreement on an updated CCBSA B-BBEE ownership condition.

Following the announcement, the 8,000 employees of the soft beverage giant who already held 5% of the private company will now own 15%, reports Reuters.

Adding to the company’s external BEE partners, the combined black-owned equity stake will be 20%.

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The value of the transaction was not disclosed and will be vendor financed and run for 10 years. Employees will receive trickle dividends from day one.

In 2014, the Coca-Cola Company and SABMiller Plc reached an agreement with the majority shareholder of a company that bottled Coca-Cola’s products to combine the bottling operations of their non-alcoholic beverage businesses in Southern and East Africa, which led to the creation of CCBSA’s parent company, Coca-Cola Beverages Africa.

Coca-Cola Beverages South Africa (CCBSA) increases stake held by employees and black empowerment investors in the company to 20%

The merger required the parties to increase black empowerment ownership of CCBSA, a government rule meant to reverse decades of economic exclusion of black people under apartheid.

Companies in South Africa are required to meet the rules of a scheme called Black Economic Empowerment (BEE) which allows black employees and investors to hold equity in the company. This makes a company more likely to qualify for government tenders.

CCBSA gave its employees a slice of the company’s shares for the first time in June 2020, through the newly established Ikageng Employee Share Trust, created to offer workers shares and direct economic participation in the business.

Its primary focus is to ensure that every employee receives an equal allocation of shares regardless of staff level, race or years of service.

CCBSA said that of the total participation units, 25 per cent would be held in reserve for future employees and the remaining 75 per cent of the participation units were allocated equally among the eligible employees, irrespective of grade or salary as at May 26 2020.

The bottler for the Coca-Cola Company, will also be contributing R80 million (US$5.39 million) per year for three years to the government’s localisation initiatives that form part of the national efforts to rebuild the economy.

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CCBSA will also collaborate with its sugar suppliers in South Africa to increase the volume of sugar procured by CCBSA from black sugarcane farmers.

“The commitment from CCBSA to increase the level of worker ownership in the company, deepen the level of transformation in the sugar value chain and support the broader localisation drive in the economy, are important steps in our efforts to create a more inclusive economy in South Africa,” said dtic Minister Ebrahim Patel.

The move to increase procurement from black sugarcane farmers will see CCBSA and other industrial retailers and users of sugar procure at least 80% of their sugar needs from local sugar millers in 2021.

This amount is expected to increase to 95% by 2023, according to Patel.

“We want to thank Minister Patel, the dtic and the Competition Authorities for the constructive and positive engagement which has resulted in an effective solution, in a very challenging environment, that directly benefits both the employees of CCBSA and assists government with their important localisation initiatives, which is fully supported by the Coca-Cola system in South Africa.

“We look forward to the strengthening of our partnership with government in this way and it underscores our commitment to doing business the right way by creating a better, more inclusive future for all,” Velaphi Ratshefola, Managing Director of CCBSA concluded.

Other African food companies who have offered its employees stake in the organizations include Kenyan-based technology food distribution platform, Twiga Foods and leading milk and dairy products producer in Zimbabwe, Dairibord Zimbabwe Limited.

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