Bloomberg/Waldo Swiegers

Economy Markets

Clover gets $359 million offer in South Africa investment boost

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The dairy producer currently gets about 10 per cent of its revenue from outside South Africa.

Tuesday 05, February 2019

(Bloomberg) --Clover Industries received a buyout offer from investors led by Israel’s Central Bottling Company that values the South African company at ZAR 4.8 billion ($359 million), giving a boost to President Cyril Ramaphosa’s effort to lure foreign investment to the country.

The acquiring group offered ZAR 25 a share for the Johannesburg-based dairy and drinks producer, compared with a Friday closing price of ZAR 20, Clover said in a statement on Monday. The investment vehicle is 60 per cent owned by CBC, the owner of Israel’s Coca-Cola Company franchise, with other investors including Brimstone Investment, a South African firm.

The shares rose as much as 21 per cent to a record ZAR 24.22, extending gains since Clover first said it was the target of takeover interest in October.

The deal has been recommended by the company’s independent board, led by Steve Booysen, one of the executives working to revive scandal-hit retailer Steinhoff International Holdings NV, and also including former Shoprite Holdings Chief Executive Officer Whitey Basson.

While foreign takeovers of South African listed-companies have been a rarity in recent years, Ramaphosa has made clear since he took over the presidency 12 months ago that international investment is a centrepiece of his plans to revive the economy.

Challenges include weak economic growth, fueled by high unemployment and stretched household incomes, while five countries, including the US and the UK, have warned that ongoing corruption scandals are a barrier to investment, according to the Sunday Times.

Regarding the economy, CBC is “investing for long term, even if there are some ups and downs in the short term,” Izsak said. Furthermore, the acquirers plan to boost Clover’s presence in sub-Saharan Africa, taking products such as the company’s own-branded milk and cheese and soft drinks such as Tropika to a wider customer base.

Clover has the potential to play a major role in the development of retail economies in South African townships, Izsak said, referring to poor settlements typically found on the outskirts of major cities.

TAGS : President Cyril Ramaphosa, Clover Industries, FDI, Central Bottling Company

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