Clover Managers Back Bidders With Africa Growth Plans

JOHANNESBURG (Capital Markets in Africa) – Clover Industries Ltd. management plans to buy into the business alongside a group of investors that offered 4.8 billion rand ($338 million) to acquire South Africa’s largest publicly traded dairy-products manufacturer.

If the transaction goes ahead, the Johannesburg-based company will expand into other African markets, Chief Executive Officer Johann Vorstersaid in a phone interview on Tuesday. A consortium led by Tel Aviv-based Central Bottling Co. offered 25 rand a share for Johannesburg-based Clover in February, and shareholders will vote on the transaction on March 29.

“The buyers are mainly family-owned businesses that have a longer-term view than some of our current investors,” Vorster said. “Management has a long-term view and is committing to another 5 years with Clover.”

With consumer spending declining in its main market of South Africa, Clover plans to invest in technology, develop new products and increase its market share. The company continues to invest in expanding capacity and recently added a new yogurt line, with plans to introduce products including flavored margarines, said Vorster.

Outside its home market, the company plans initially to build a more substantial presence in eastern African countries including Kenya, Tanzania and Malawi, he said.

Activist Objections
The offer for Clover sparked controversy last month when a pro-Palestinian activist group objected to the deal. South Africa’s ruling African National Congress had close ties to the Palestine Liberation Organization during the apartheid era and Israeli interests are frequently the target of protests.

Brimstone Investment Corp., which is part of the bidding group, said Feb. 7 it’s reviewing its role in the transaction.

“As far as we are aware Brimstone is still part of the deal at this point,” Vorster said.

Clover said first-half earnings, excluding some items, rose 5.1 percent to 235.9 million rand ($16 million), while the interim dividend was increased by 5 percent. The shares were little changed at 22.64 rand as of 9:50 a.m. in Johannesburg, valuing the company at 4.3 billion rand.

Source: Bloomberg Business News