South Africa approves SABMiller, Coke bottling deal with conditions

* Conditions include limiting job cuts to 250

* Merger parties welcome decision

* Transaction to complete as soon as practicable (Adds comment from Coca-Cola and Gutsche)

By Nqobile Dludla

JOHANNESBURG, May 10 (Reuters) - South Africa's Competition Tribunal on Tuesday conditionally approved a SABMiller (Amsterdam: MI8.AS - news) and Coca-Cola deal to combine their African soft drink operations into what would be the continent's biggest Coke drinks bottler.

In a bid to fast-track the antitrust probe, SABMiller (Xetra: BRW1.DE - news) and Coca-Cola struck a deal with the South African government earlier this month that included an 800 million rand ($53 million) investment to support small businesses and a three-year freeze on layoffs.

The Competition Tribunal said the deal can go ahead subject to several conditions. These include the enlarged group limiting job cuts to 250, providing business skills to 25,000 black retailers and ensuring it purchases cans, glass, sugar, fruits and crates from local suppliers.

The Coca-Cola Beverages Africa merger parties welcomed the Competition Tribunal's approval saying in a statement they expect the transaction to complete as soon as practicable.

"Today's announcement ensures that the creation of Coca-Cola's largest bottling partner in Africa will strengthen our business while also closely aligning with the South African government's national imperatives for social and economic development," Coca-Cola Chief Operating Officer James Quincey said.

"This agreement marks the latest important step in that journey."

Brewer SABMiller, which is in the process of being taken over by Anheuser-Busch InBev, agreed in November 2014 to team up with Coke and the South African owners of local bottler Coca-Cola Sabco to create Coca-Cola Beverages Africa.

Coca-Cola Beverages Africa, which will account for 40 percent of all Coke volumes sold in Africa, will be headquartered in South Africa, its largest market. It (Other OTC: ITGL - news) will have annual sales of $2.9 billion and operations in 12 markets across Southern and East Africa.

"Given the scope and reach of the new company, and its commitment to being headquartered in South Africa, the merger helps position the country as the undisputed economic gateway to Africa," Gutsche Family Investments chairman Phil Gutsche said.

The bottling deal was given a preliminary approval in December by South Africa's Competition Commission. The green light from the Tribunal removes the final hurdle in a drawn-out antitrust investigation.

South Africa has a history of taking its time over approving deals, partly because regulators have a public interest mandate to safeguard jobs in addition to ensuring there is competition.

The South African Competition Commission investigates deals for any antitrust issues and recommends remedies to the Competition Tribunal, which makes a final ruling.

Upon completion of the all-equity deal, Coke will own 11.3 percent of the venture, the Gutsche family that owns Coke Sabco 31.7 percent and SABMiller 57 percent.

Coke has the right to buy SABMiller's stake in the new venture in the event of a change of control at the brewer, sources have told Reuters. This could be triggered by the expected takeover of SABMiller by AB InBev. (Editing by Alexander Smith)