Investment holding company Brimstone has found a replacement BEE investor for its 15% stake in Clover, SA’s biggest dairy producer.
Brimstone was due to participate in a consortium, which in early February announced a R4.8bn offer to acquire 100% of Clover.
However it caved in to pressure from pro-Palestine activist group Boycott Divestment Sanctions SA (BDSA) who opposed the deal because the consortium was led by Tel Aviv-based Central Bottling Company.
After the proposed deal was announced BDSA threatened to instigate a boycott of Clover. The organisation said there would be “direct action and a militant but peaceful campaign” if the transaction proceeded.
Shortly afterwards Brimstone indicated it would pull out of the transaction, saying it had noted “widespread outrage” over its proposed participation in the deal.
At the end of April the Cape-based BEE group formally announced it was withdrawing from the transaction. It was given until December 31 to secure a replacement BEE investor or it would have to sell its 15% to International Beer Breweries, a subsidiary of Central Bottling Company.
On Friday, Brimstone announced that BEEMilk — an entity representing a consortium of investors comprising Khulasande Capital, Global Capital Empowerment Fund and Ubisi Noju — would be replacing Brimstone in the Clover consortium.
Limited information on the members of BEEMilk is available, but Khulasande and Global Capital Empowerment Fund appear to have links with Investec. Fani Titi, joint CEO of Investec, is part of Khulasande’s “team”, as is former Investec CEO Stephen Koseff. Investec is a 25% shareholder in Global Capital Empowerment Fund.
Brimstone said the aborted bid to become a significant shareholder in Clover cost it R62.3m, equivalent to 25.7c a Brimstone share.
Brimstone’s announcement comes a week after the Competition Commission said it had recommended to the Competition Tribunal that the proposed takeover of Clover by Milco be approved with conditions.
The conditions include the requirement for “the merging parties to procure juice concentrate from their current local suppliers for a certain period on reasonably the same terms and conditions as prior to the merger”.
The commission’s announcement caused the Clover share price to perk up to R23.50, its highest level since the February announcement. On Friday it closed unchanged at R22.90.
Independent analyst Anthony Clark said the share price had been hit by the uncertainty around the deal and that it had offered a good opportunity to buy the shares ahead of the deal, which he is convinced will go ahead.