JOHANNESBURG/LONDON (Reuters) - SABMiller (>> SABMiller plc) and Coca-Cola (>> The Coca-Cola Co) have agreed concessions with the South African government to win approval for their plan to merge African soft drink operations into what would be the continent's biggest Coke drinks bottler.

The concessions, announced on Wednesday, agreed with the South African Ministry of Economic Development, include a three-year freeze on layoffs and the companies investing 800 million rand (37.26 million pounds) to support small South African businesses.

Brewer SABMiller, in the process of the being taken over by Anheuser-Busch InBev (>> Anheuser-Busch Interbrew), 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, which would have annual sales of $2.9 billion and operations in 12 markets across Southern and East Africa.

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.

Sources familiar with the situation said there is a change-of-control clause that would allow Coke to buy SAB's stake following SAB's takeover by AB InBev, expected in the second half of this year.

Coke's ambitions are unknown, but some industry sources said a continuation of the current arrangement was unlikely. They point to AB InBev's status as a PepsiCo (>> PepsiCo, Inc.) bottler in Latin America and the fact that it does not have a history of keeping stakes and joint ventures like SAB.

Coke has been moving away from outright ownership of bottling assets, which are more capital intensive and lower-margin than selling syrup and marketing, meaning there could also be an opportunity for other bottlers, such as Coca-Cola HBC (>> Coca Cola HBC AG) or Coca-Cola Femsa (>> Coca-Cola FEMSA, S.A.B. de C.V.), to expand.

Coca-Cola declined to comment on the terms of its agreements or plans for the stake, which one source said could be worth as much as $3 billion.

Last week, during AB InBev's annual meeting, company executives declined to detail their plan for Coke in Africa.

LAST HURDLE

The bottling deal was given a preliminary approval in December by South Africa's Competition Commission, which said it could go ahead on several conditions including limiting jobs cuts to 250 and making sure it buys 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. A Tribunal hearing on the proposed deal, which would be a last hurdle, is due to start on May 9.

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.

"I am very happy that we have reached this agreement and hope we now have a clear path to the conclusion of this transaction," SABMiller Chief Executive Officer Alan Clark said.

The $100 billion-plus takeover of SAB has also included concessions made to the South African government.

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.

The deal will also hand Coke an extra 20 brands, including soft drink Appletiser, whose fruit juice concentrate is sourced from South African producers.

Coca-Cola and SABMiller agreed to maintain and grow Appletiser operations for the domestic market and use it as a base for export.

(Reporting by Tiisetso Motsoeneng. Additional reporting by Philip Blenkinsop.; Editing by Mark Potter and Jane Merriman)

By Tiisetso Motsoeneng and Martinne Geller