SOUTH AFRICA – Brimstone Investment Corporation, a South African investment firm, has announced that BEEMilk will be replacing it in the proposed acquisition of Clover Industries, where it was set to hold a 15% stake.
The investment company was due to participate in a consortium, which in early February announced a US$359 million offer to acquire 100% of Clover.
However, in April Brimstone announced that it will not be participating in the deal following continued pressure arising from criticism by the lobby group Boycott, Divestment, Sanctions (BDS) South Africa on its involvement in the transaction led by an Israel based company.
The transaction to acquire the country’s leading milk processor, which has so far received Competition Commission’s approval, is led by Tel Aviv-based Central Bottling Company (CBC) under the consortium Milco SA.
Brimstone was then 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.
The company has now successfully secured a replacement in the transaction.
Brimstone has said 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.
According to a Business Live report, Khulasande and Global Capital Empowerment Fund appear to have links with Investec – is a 25% shareholder in Global Capital Empowerment Fund.
In addition, Fani Titi, joint Chief Executive Officer of Investec is also part of Khulasande’s “team”.
Despite Brimstone earlier on indicating that the transaction costs related to any deal were not expected to significantly affect the company’s financial position, the company has said the aborted bid to become a significant shareholder in Clover cost it US$4.38 million (R62.3m).
If the deal closes, CBC will hold the majority stake (59.5%) in the consortium whose other members include Ploughshare Investments, which will acquire 10.9%, and IncuBev with 8.3% while Clovers management will retain a 6.3% stake.
Clover said that the transaction, which will culminate in its de-listing at the Johannesburg Stock Exchange, is set for the tribunal’s hearing in the coming weeks.
Clover operates its business in the food and beverage industry under the dairy fluids, dairy concentrated products, ingredients, non-alcoholic beverages and fermented segments among others.