Bottle battle settled

So the fact that SABMiller and Diageo have “amicably” settled a dispute between their subsidiaries in Tanzania suggests that it was in SABMiller's interests.

The deal brings to an end an unholy alliance in East Africa that was attracting unfavourable attention from the Tanzanian competition authorities. More to the point, the terms of the agreement are likely to have been commercially attractive to SABMiller as it was arguing from a position of strength.

In 2002 the two companies signed two agreements designed to end a bruising marketing battle between them.

However, last August this cosy cross holding came to an abrupt end when SABMiller won a court injunction in the UK to prevent EABL from acquiring a majority stake in their joint competitor, the privately owned Serengeti Breweries.

SABMiller argued the acquisition would be in breach of the agreement between Tanzania Breweries and EABL. The court upheld this, pending a hearing on the matter this year.

But now the companies have agreed that EABL will sell its stake in Tanzania Breweries and go ahead with its plans for acquiring the Serengeti stake.

Terms have not been disclosed, apart from saying it was a “commercial settlement”, according to SABMiller's head of media relations, Nigel Fairbrass.

Perhaps the consumer is the ultimate winner. SABMiller has a “commanding share” of the Tanzanian market, according to Fairbrass. EABL and Serengeti, should they merge, will hold about 30%. Competition in the lucrative East African markets can only heat up.

Source: Financal Mail