South Africa's Brimstone pulls out of Clover deal

The company said it has a plan to facilitate its exit.

JSE-listed investment firm Brimstone Investments confirmed on Friday that it will not be participating in a consortium that is seeking to acquire South Africa’s biggest dairy producer Clover.

The company has agreed on a plan to facilitate its exit and to do so, it has entered into an agreement with a consortium that is looking to acquire Clover.

In February, Brimstone said that it is reviewing its participation in a consortium that is seeking to acquire dairy producer Clover after protests over the participation on an Israeli company in the deal.

On February 4, Clover Industries said it received a R4.8 billion buyout offer from a consortium of companies called Milco, which offered Clover shareholders R25 per share.

The Milco consortium is led by Israel-based Central Bottling Company (CBC), which is offering to buy 59.5 percent of Clover. The remainder of the shareholding would be held by Brimstone Investment Corporation (15 percent) and executive management of Clover (6.3 percent).

Brimstone was in advanced talks with a replacement black empowerment partner for the consortium, the company said.  

Brimstone may still hold a stake in Clover but was negotiating with Nigeria-based International Beer Breweries Limited (IBBL) over a “back-stop” agreement as it seeks a replacement empowerment partner. Under the terms of the proposed agreement, IBBL would acquire Brimstone’s stake on December 31, 2019, should Brimstone not find someone else to acquire it.

“Brimstone shareholders are advised that Brimstone is currently in advanced negotiations with a potential Replacement B-BBEE Shareholder which, if successful, could result in Brimstone exiting its entire shareholding in Milco SA before 31 December 2019,” the company said in a statement.