Brimstone finally walks away from Clover deal
More than two months after announcing a decision to reconsider its participation in the consortium eyeing Clover, investment firm Brimstone on Friday confirmed its exit from the R4.8bn deal.
The move ends suspense about the fate of the deal, in which a group of companies led by Israeli firm Central Bottling Company (CBC) will acquire Clover’s shares for R25 each.
The door has now been opened for an unnamed black economic empowerment (BEE) company to acquire Brimstone’s 15% interest in the consortium.
Brimstone said on Friday it was in “advanced” negotiations with a potential BEE shareholder which could take up its R726m stake in the deal by December 31 2019.
Days after the announcement of the transaction in February, the black-owned and -managed company said it would review its participation, bowing to pressure from Palestine solidarity organisation BDS SA and the Food and Allied Workers’ Union (Fawu). They highlighted the participation of CBC in the consortium, also known as MilCo. BDS threatened to disrupt Clover’s operations if the deal went ahead.
Brimstone said it had sealed an agreement with MilCo and International Beer Breweries Limited (IBBL), a subsidiary of CBC “to facilitate Brimstone’s exit from its participation in the Clover transaction”.
In terms of the agreement, IBBL will acquire Brimstone’s interest in Milco on December 31 “if by that date Brimstone has not been able to secure a suitable replacement broad-based BEE investor”.
MilCo on Friday reiterated its commitment to finalise the transaction, which will culminate in Clover’s delisting in midMay. “In addition, the consortium remains fully committed to having a significant BEE partner as part of the transaction,” MilCo said in a statement.
The consortium, whose other members include food and beverages group IncuBev, investment firm Ploughshare Investments and Clover executive management, said the transaction is proceeding. “The deal is intact and moving ahead.”
Brimstone declined to comment further.
Fawu general secretary Katishi Masemola applauded Brimstone for walking away from the deal. However, not allay all Fawu’s misgivings have been allayed.
“We are opposed to the deal on various grounds. The first one relates to the participation of the Israeli company. Our country and companies should not do business with Israeli companies,” Masemola said.
The union also opposed the deal because it would result in the sale of SA’s only major dairy company. “Danone is French, Nestle is Swiss and Parmalat is Italian. Only Clover is in local hands,” he said.
Fawu was concerned about potential job losses, saying the new owners could depart from Clover’s strategy to pursue higher volumes, Masemola said. “Clover is one of few major companies that still has merchandisers internally,” he said.
The union has questioned the exclusion of employees in the ownership structure of MilCo. “We have made a submission to the Competition Commission about public interest conditions that must be attached to the transaction,” Masemola said.