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No word yet from Brimstone on Clover deal due to lobby group

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The black-owned investment firm says it is still reviewing its participation in the R4.8bn Clover transaction

Almost two months after Brimstone said it would review its participation in the Israeli-led consortium eyeing Clover in a R4.8bn deal, its prospective partners are still in the dark about their final decision.

Brimstone was due to take a 15% interest in the Milco consortium, which made a firm offer to buy the producer of dairy and non-alcoholic beverages two months ago. But on February 7, days after the announcement of the transaction, Brimstone, which is the majority shareholder of fishing and food company Sea Harvest, made an about-turn following some outcry as pressure against the deal mounted.

Lobby group Boycott, Divestment and Sanctions SA (BDS) threatened a boycott of Clover due to the consortium being led by Israel-based Central Bottling Company (CBC). Through its foreign subsidiaries, CBC has manufacturing and distribution operations in Turkey, Romania and Uzbekistan.

In a further cautionary announcement on March 22, Brimstone, which has investments in industries such as fast-moving consumer goods, healthcare and financial services, said it was still reviewing its role in the deal.

Nisaar Pangarker, Brimstone managing executive, would not comment on the company’s participation in the transaction, saying the firm is still trading under a cautionary triggered by the decision to review its participation in the consortium.

Despite the uncertainty about Brimstone’s participation in the deal, last Friday, Clover’s shareholders overwhelmingly voted in favour of the transaction, with more than 99% of the shareholders endorsing the deal.

According to timelines in a February 28 circular to shareholders, Clover will cease to trade on the JSE and the Namibian Stock Exchange — in which the dairy company has a secondary listing — on May 15. Clover has been listed on the JSE since December, 2010 and on the Namibian bourse since April 22 2015.

In February, Clover said the JSE had granted approval for the termination of its listing. 

Clover’s board has said that the R25 per share offered by the consortium constituted fair value for Clover shares. The stock closed 0.3% down at R23.08 on Thursday.

In the circular, Clover’s independent expert, PwC director Jan Groenewald said Clover’s “most likely” value was R24 per share. Groenewald said the deal was fair and reasonable. “Our Market Value range is based on a standalone valuation of Clover under current management and business plans compiled in 2018 and provided to us by [Clover] management in November 2018.” 

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