Brimstone Investment sells its Clover shares to BEE consortium

After the company caved into pressure from pro-Palestine activist group.

JSE-listed investment firm Brimstone Investment has secured a replacement black economic empowerment (BEE) investor to acquire its 15 percent shareholding in Clover, South Africa’s biggest dairy and branded foods producer.

Brimstone confirmed in April that it will not be participating in a consortium called Milco SA that planned to acquire Clover in a deal worth R4.8 billion. It caved into pressure from pro-Palestine activist group Boycott Divestment Sanctions SA, who opposed the deal because the consortium was led by Tel Aviv-based Central Bottling Company (CBC).

Before caving in, Brimstone agreed on a plan to facilitate its exit and to do so, it entered into an agreement with a consortium or buyer that is looking to acquire Clover. It was given until December 31 to secure a replacement BEE investor or it would have to sell its 15 percent to International Beer Breweries, a subsidiary of Central Bottling Company.

Brimstone announced 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.

Brimstone said the aborted bid to become a significant shareholder in Clover cost it more than R60 million. Brimstone indicated in a statement on Friday that the anticipated total one-off costs incurred and to be incurred to give effect to the board’s decisions to enter into and exit the Clover transaction would be R55 million relating to Brimstone’s contribution in disposing of its right to subscribe for Milco shares; R6.2 million in legal and regulatory fees; R7.3 million in advisory fees; and R200 000 in other costs.

Last week, the Competition Commission approved, with conditions, the sale of Clover to a consortium led by CBC. Clover said that the R4.8 billion deal has been approved by the competition authority and recommended to the Competition Tribunal.

According to Clover, the conditions relate to, among other things, employment and local procurement “which were part of the investment case for [the consortium.]) Milco SA. The conditions applicable to the implementation of the Clover scheme are acceptable to both parties”.