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activity/project is forecast to be on schedule on both integration and synergies, but way
overrunning its costs by as much as 381%. This is likely linked to costs which were initially
unanticipated, such as costs to meet regulatory hurdles and concessions to persuade SA

authorities about intentions to delist from the JSE!
Recommendation: Speed-up deal closure so we can begin implementing a stringent system of
project and feedforward controls around the integration of the two entities to ensure all schedule and

cost variances will be brought back in line with expectations!

Justification: The projected cost overruns may end up being way too high (59%) as of the mid-way
point; these will reduce the value of the synergies and in hindsight, may mean, we would have overpaid

for the acquisition. The schedule overruns as well are projected to be as high as 54%, meaning instead
of the 4 years horizon to integrate the two entities, it could go as high as 6-7 years, effectively turning
one of our key strengths –track record in M/A and integration, into a weakness.

Actions
• Immediately commence negotiations (and fulfilling agreement) with regulatory and competition

authorities in all the jurisdictions where AB InBev and SABMiller operate;
• Start the process of setting up and funding a specific Supplier Development Task to develop
current suppliers in South Africa and the main countries where regulatory hurdles are expected,
and work closely with these suppliers, to develop their businesses into full export-oriented status;

• Enter into negotiations with the strategic consulting firm, EVA, and SAP to around the revised cost
estimates and their availability to commence work;

• Review the needs of SABMiller and how well each individual’s skills match the business needs
once we acquire them. Redundancies should then be made according to the skills and
competencies rather than age and salaries. If necessary, should seek advice from an

employment lawyer to ensure that any redundancies are not illegal on the grounds of
discrimination. Take account of the current size and workloads of each divisions in setting
criteria for redundancies and hold consultations with the Divisional Managers, to gain a clear

picture of the impact of the SHCRR programme on each Division. Instead of making the DMs
responsible for the redundancy process, the HR department should retain responsibility for
implementing the process. Equally, instead of arbitrarily selecting people to be made

redundant, the HR department should work in conjunction with the DMs to select the people
to be made redundant in relation to their skills and the business’ requirements.

2 Priority: Deal Funding & Group Financial Performance
nd

This issue is strategic weakness and an opportunity in our SWOT analysis (Appendix 1). We have
launched a major acquisition for SAB Miller with no clear strategy to raise the requisite cash; yet it
Developed by The CharterQuest Institute for 'The CFO Business Case Study Competition 2018'
www.charterquest.co.za | Email: thecfo@charterquest.co.za