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Clover, Milco merger puts 657 jobs on the line

| Supplier news

A total of 657 existing jobs will be on the line at Clover Industries in the next two years if the R4.8 billion merger between the JSE-listed dairy company and Israel-based Milco is approved by the Competition Tribunal.

These were the final figures submitted by Clover to the tribunal yesterday as the group made additional submissions in the hearing of its proposed merger with Milco.


In July, the Competition Commission recommended that the proposed large merger be approved with conditions, especially those relating to employment and local procurement.

Milco had announced in February that it would acquire the entire issued share capital of Clover for R25 per share.

Clover, the listed branded consumer goods and beverages group, has a market capitalisation of more than R4.3bn and employs around 9 000 workers.

But the proposed acquisition is opposed by labour unions, the Food and Allied Workers Union and the General Industry Workers Union (Giwusa), who have 2 600 and 2 000 members at Clover, respectively. 

Clover’s group manager for product technology and technical services Anton Pretorius said the merger would affect a number of permanent workers, contract workers, and workers under labour brokers.

Pretorius said other jobs would also be shed as a result of early retirement and natural attrition, as the firm progresses with its optimisation and consolidation of factories Project Sencillo in the next three to five years.

“Restructuring is part of the DNA of the manufacturing industry. This project deals with cost-effectiveness as there has been a gradual movement of raw milk production from inland to coastal regions,” Pretorius said.

“Project Sencillo has been an ongoing project at Clover over the years to help it to optimise its assets and productivity. It is not connected to the transaction.”

Despite looming retrenchments at its various operations, Clover argued that the tribunal must approve the merger with conditions, because it would create a further new 273 jobs. 

Clover’s legal representative, Richardt van Rensburg from law firm ENSafrica, said the pending retrenchments had been revised down from 1 025 to just above 600 as the merger had a net positive public interest effect. 

Van Rensburg said that the job losses were merger-specific, and should not be associated with Clover’s project to streamline its plants. 

“It is unavoidable that there are going to be retrenchments. Of course, Clover is concerned about job losses and is not taking lightly the potential retrenchments. But there will be 550 opportunities available to existing employees,” Van Resnburg said. 

“There is a net positive public interest effect of 273 new job opportunities. The merger will improve the employment situation. 

"Through an expected growth in exports, expanding distribution in the informal economies, and introduction of new products we believe the transaction will create a net positive effect of 273 jobs.”

Giwusa general secretary John Appolis argued that the tribunal should dismiss Clover's submissions as conditions were not providing any protection for existing employees.

Appolis said the actual number of job losses would be much higher than those presented by Clover.

“The conditions set by the commission are not providing any protection for existing employees. At least 806 families are going to be destroyed and there is no mitigation by creation of employment opportunities,” Appolis said. 

“Existing employees have contributed over the years in the success and current valuation of Clover. 

"The merger and even the conditions are not in the interest of existing employees who have contributed to the company over the years. 

"We would like the tribunal to reject the merger.” 

The delay in the decision on the merger has forced Milco and Clover to extend the date for fulfilment or waiver from August 23 to September 20. The commission's senior legal counsel, Thabo Khumalo, said they welcome the reduction in numbers of the affected employees.

“Our position has not changed, but we welcome the reduction in numbers of affected jobs. Our final submission is that the tribunal should approve the merger with conditions,” Khumalo said. “But we are still grappling with the meaning or the impact of including contract workers in the affected employees.”

Khumalo said that the commission would today make a revised set of adjustments about contract workers to be affected by retrenchments. 



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