South Africa's antitrust watchdog gives SABMiller, Coke deal preliminary approval

JOHANNESBURG, Dec 17 (Reuters) - SABMiller (Xetra: BRW1.DE - news) and Coca-Cola's proposed deal to combine their operations that mix, bottle and distribute soft drinks in Africa, cleared a major hurdle on Thursday after South Africa's competition watchdog gave its preliminary approval.

SABMiller and Coca-Cola agreed in November 2014 to team up to create the continent's largest soft drinks bottler, a group with annual sales of $2.9 billion and ambitions to corner a fast-growing market.

The group, Coca-Cola Beverages Africa, will account for 40 percent of all Coke volumes sold in Africa, serving 12 southern and eastern African countries.

Coca-Cola Beverages Africa will be headquartered in South Africa, its largest market.

South Africa's Competition Commission said the deal can go ahead on several conditions that include the enlarged group limiting job cuts to 250 and making sure it purchases cans, glass, sugar and crates from local suppliers.

The Commission investigates deals for any antitrust issues and recommends remedies to the Competition Tribunal, which makes a final ruling. There is no set timescale.

The all-equity deal would also hand Coca-Cola an extra 20 brands, including sparkling soft drink Appletiser, whose fruit juice concentrate is sourced from South African producers.

The Commission said the merged entity has agreed to continue sourcing fruit concentrate in South Africa to ensure that producers did not shut down or cut jobs. (Reporting by Tiisetso Motsoeneng; Editing by Elaine Hardcastle)