Week in Review, November 29 Coca-Cola and SABMiller unveil African bottling deal The African continent's growing thirst for beer and soft drinks holds great promise for global beverage groups. Coca-Cola and SABMiller, the brewer behind Miller Lite, Peroni and Grolsch, aim to capitalise on that potential by merging their African bottling assets in a joint venture that also marks a diversification for both groups, writes Scheherazade Daneshkhu in London. The deal will create Africa's largest bottler of Coca-Cola, with annual revenues of $2.9bn and operating profits of $505m, and will cover 12 countries in southern and eastern Africa. Other south African bottlers are also included in the joint venture, Coca-Cola Beverages Africa, in which SABMiller will hold a 57 per cent stake and Coca-Cola 11 per cent. "There is a mutually beneficial situation," said Amin Alkhatib, analyst at Euromonitor. The soft drinks company is benefiting from the brewer's strong footprint in the continent and the brewer diversifying its revenue source toward a more dynamic market. The market research group forecasts a 7 per cent rise in annual soft drinks sales in Africa and 5 per cent for beer. Sales of Coke's core fizzy drink have been falling in its domestic market while SABMiller, the world's second largest beer group, has reported flat or falling lager sales. Coca-Cola, which has a policy of expanding its range of beverages, will also buy SABMiller's Appletiser, a carbonated fruit juice, for $260m, and the rights to another 19 soft drinks in the brewer's portfolio. Analysts were divided over whether the deal would make SABMiller more or less likely to be taken over by Belgium's Anheuser Busch Inbev. "The deal increases ties with Coca-Cola, which is potentially an attraction for ABInbev," said analysts at Berenberg. But Mr Alkhatib said the joint venture would make it costlier and more complex for ABInbev to mount a bid, especially since the world's biggest brewer is a bottler for Coke rival PepsiCo in Latin America. ● Related Lex note: who's for a fruit beer? ● Related Lombard note: SABMiller's Coca-Colanisation of Africa China extracts $140m of back taxes from Microsoft It has been a tough year for Microsoft in China, writes Charles Clover in Beijing. First Windows 8 was banned for "environmental" reasons in May and then the government launched an antitrust case in July. Last week it also emerged that Microsoft has had to pay $140m in back taxes and interest which was played up by Xinhua, the Chinese official news agency as "the largest tax evasion case in China." Adding to the intrigue was that Xinhua did not actually name Microsoft but referred to a company "whose name starts with M" and has financial details identical to the technology company. Microsoft was just as oblique in its response. The company said that it had come to an agreement with the Chinese authorities to pay $140m. "In 2012, the tax authorities of China and the US agreed to a bilateral advanced pricing agreement with regards to Microsoft's operations in China," the group said. Qualcomm, the chipmaker, faces an antitrust inquiry into its intellectual property licensing business, which could lead to a fine of more than $1bn. The company says it will "vigorously defend" itself, and is co-operating. Apple's privacy and security practices have also been attacked by state media in recent months. ● Related Lex note: cold shoulder in China Call to break up Google threatens diplomatic ties Google came under fire on several fronts in Europe this week, as the battle led by the continent's politicians and regulators to rein in the internet company's power threatened to become a diplomatic conflict between Washington and Brussels, writes Murad Ahmed in London. Leading the charge was the European parliament, which overwhelmingly backed a motion on Thursday that called on regulators to consider the break-up of Google. The vote was a symbolic gesture, impossible to enforce but designed to put pressure on the European Commission to take a tougher line, either through its antitrust investigation or via the introduction of laws to curb its reach. The move led US Republican and Democratic politicians to make a rare intervention on behalf of the Silicon Valley group. In open letters, Capitol Hill lawmakers expressed alarm over "proposals that seem to target US technology companies" and criticised the apparent attempt to politicise the continuing antitrust probe into Google's search engine. But the company gained some unlikely support from Günther Oettinger, the EU digital chief and vocal critic of Google's market dominance. He said the European parliament resolution was "an important expression of opinion" but added: "I don't think, at the end of the day, that the breaking-up as such is what we can expect. Rather we are talking about the consistent and correct implementation of EU legislation to ensure that the interests of EU businesses and stakeholders are ­maintained. In a torrid week, Google also faced criticism from the EU's privacy watchdogs who said the company needed to do more to implement the new "right to be forgotten" laws online. Data protection regulators representing each of the member states said Google should strip sensitive links from all global versions of the search engine, not just its European sites. On Wednesday, a group of influential German ministers also sent a letter to the commission asking it to consider far-reaching legislation that would regulate internet platforms so "positions of economic power remain open to competition." ● Related Lex note: trust and antitrust BG Group stands by chief's £14m pay deal ahead of vote BG Group is bracing itself for a shareholder revolt over the multimillion-pound pay and bonuses offer to Helge Lund, its proposed new chief executive, which would make him one of Europe's best-remunerated oil bosses, writes Michael Kavanagh in London. Mr Lund, who announced his plan to step down from Norwegian oil champion Statoil last month, is set earn up to £14m a year if investors in the FTSE 100 company approve terms of his pay package at a specially convened shareholder meeting next month. If the offer is accepted Mr Lund could earn up to 10 times his salary at Statoil, which, though listed in Oslo, is majority owned by the Norwegian state. On Wednesday BG defended the broad terms of the pay package on offer to Mr Lund, who is widely credited with having improved the performance of Statoil during his period in charge. "His proposed remuneration is competitive in the international oil and gas industry," said the explorer. However, this week the Institute of Directors, the Investment Management Association and Institutional Shareholder Services - which represents about 20 per cent of the UK stock market as an adviser on shareholder votes - called on investors to challenge the terms of Mr Lund's pay package. Several leading shareholders in BG - which has suffered a severe slide in valuation over the past two years - have signalled their hostility to the pay deal. The shareholder vote is scheduled to take place on December 15. ● How to be a "digital disrupter": 1) Select unpopular industry, eg banking. 2) Pick friendly name, eg Lending Club. 3) Use technology to cut out middleman, eg actually lend money. 4) Grow rapidly, eg lend $6.2bn. 5) Add shareholders, eg extend IPO this week. 6) Begin to look similar to those you mean to disrupt, eg hire Morgan Stanley's John Mack. 7) Er, what next? Mortgage securitisation, or currency fixing, like the banks? Better not. ● After more than 20 years of saying, "Ooh, here's an idea, why don't we cover that cushion/rucksack/entire room/small child in a floral print redolent of a 1950s upbringing that few ever really had?" Cath Kidston - purveyor of ersatz chintz to the middle classes from China to Chipping Norton - has stepped down as creative director of the eponymous retail chain. But no need to sob into your polka- dot hanky, she will remain on the board. ● Remember "Wenlock," the one-eyed mascot of the London Olympics? No, and nor does almost anyone else because, like "Izzy," the amorphous blob of the Altanta games (dubbed "The Sperm in Sneakers" by Time Magazine), he was the brainchild of "designers." But it appears Wenlock and his progenitors still have some fans. This week, South Korea's Cheil Worldwide bought the design agency responsbile: the somewhat ironically named Iris. ● Amid all the compulsory air kissing and beard topiary at their never-ending cocktail parties, do fashionistas ever ask each other what jobs they do? If so, Johnny Coca will need a new stock answer, having taken his sculpted stubble from French luxury house Céline to British handbag maker Mulberry. "Designer of small dog caddies," perhaps? "Celebrity elbow crevice filler"? Probably best to stick with "creative director."