Dairy firm Clover Industries’ JSE-listed shares rose by 21% on Monday morning after it announced that it had entered into an implementation agreement with Milco South Africa (SA), which intends to make an offer to acquire all of Clover’s issued shares.
Milco SA is a new company formed by a consortium of international investors, black-controlled Brimstone Investment Corporation and the management of Clover and is offering Clover shareholders a cash consideration of R25 a share, valuing the company at R4.8-billion.
In addition to Brimstone and Clover’s management, the other members of the consortium are International Beer Breweries (IBBL), Ploughshare Investments and IncuBev. Clover noted in a statement that the consortium members all have extensive international and regional expertise in the dairy, juice and beverage industries.
Brimstone will subscribe for 15% of the entire issued share capital of Milco SA for a cash consideration of R726-million, which will be funded through debt funding.
Both Milco SA and Brimstone believe Clover presents a “uniquely attractive investment”, given its large chilled distribution capability, a strong market position for key brands and an experienced management team, Brimstone commented in a statement on Monday.
Milco SA, with its knowledge of the dairy, juice and non-alcoholic beverage industries, intends to combine its capabilities with those of Clover to unlock value through key strategic initiatives.
These initiatives are primarily aimed at accelerating sales, distribution and efficiency opportunities within Clover’s product portfolio in South Africa, and its expansion into select sub-Saharan African territories.
Clover’s shares rose by 21% to R24.22 a share in early morning trade and were trading at R23.30 a share by 11:20.