Brimstone quits consortium planning to bid for Clover

JSE-LISTED investment holding group Brimstone Investments has pulled out of the consortium that plans to acquire the entire issued capital of Clover Industries for a reported R4.8 billion.

Brimstone said it decided to ditch Milco SA, a consortium that is led by Israel’s Central Bottling Company (CBC), following a protest by pro-Palestinian activist groups in South Africa.

On Friday, Brimstone informed its shareholders that it had entered into an agreement with Milco SA and International Beer Breweries Limited (IBBL) to facilitate its exit from participation in the transaction.

“In terms of the back-stop agreement, IBBL or its affiliates will facilitate Brimstone’s exit by agreeing to acquire Brimstone’s interest in Milco SA on December 31, 2019, if by that date Brimstone has not been able to secure a suitable replacement broad-based black economic empowerment investor,” Brimstone said. CBC is a privately owned international food and beverage group, with subsidiary companies that serve more than 160 million consumers across the globe.

The transaction would have seen Milco SA taking a 60 percent ownership its of Clover upon finalisation.

Last month, Brimstone increased its stake in Oceana Group by acquiring 5.9 percent stake owned by Tiger Brands for R581 million, to take its overall stake in the fishing group to 22.88 percent.

Other members of the consortium include Ploughshare Investment, which will own 11 percent, IncuBev with 8 percent, and Clover management, with a 6 percent stake. However, Brimstone might exit the consortium before year end. It said it is in advanced negotiations with a potential replacement B-BBEE shareholder which, if successful, could result in Brimstone exiting its entire shareholding in Milco SA before the end of December.

In terms of the Clover acquisition, Milco offered to buy Clover’s entire issued share capital for R25 a share, which represented a 77 percent premium to its closing price of R14.10 on October 18, 2018.

It was reported that the consortium had secured the funding for the acquisition through its own cash resources as well as bank facilities.

Post the acquisition, Milco plans to delist Clover from the JSE and the Namibian Stock Exchange.

Clover declined 0.43 percent on the JSE on Friday to close at R23.25.