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Clover suitors churn up a big premium


Clover says the offer is an attractive opportunity for shareholders to realise value in cash and divest of their holdings at a big premium.

Clover has unveiled a R25 per share offer from a consortium of international and local investors, including Brimstone and management, to take the company private. The offer values Clover at R4.8 billion.

The dairy and drinks producer has been in negotiations since cautioning investors in October that it had entered talks with potential acquirers.

The consortium which includes operators and investors with international and regional expertise in the diary, juice and beverages industries, has already secured support from a number of Clover's major shareholders, who hold 49% of the group's shares. A successful deal would see Clover delisted from the JSE and the Namibian Stock Exchange.

Brimstone will take a 15% stake in the newly-formed 'Milco", with executive management holding 6.3%. Other investors in Milco include International Beer Brewers (IBBL), IncuBev and Ploughshare Investments. IBBL is a subsidiary of Israeli beverage maker and distributor Central Bottling Company. IncuBev is an international business focused on the food and beverage sectors in sub-Saharan Africa. Ploughshare is an independent investment company with interests and expertise in retail, distribution and beverages.

Clover presents an excellent opportunity for Brimstone to continue expanding our investments into the food sector, which is one of our portfolio's primary focus sectors," Brimstone CEO Mustaq Brey said."This transaction aligns with government's focus on attracting foreign direct investment to support inclusive economic growth and enables us to grow the business and expand Clover's footprint to new sub-Saharan territories, while at the same time boosting local community economies by doubling the number of informal retailers that Clover serves to 60 000 and creating 100 permanent new job opportunities."

The R25 is a 77% premium to the group's share price on 18 October, the day before it issued its cautionary announcement. It's a 25% premium to last Friday's closing price of R20. If they deal goes ahead, shareholders will still receive their interim dividend.

Given the relatively low trading volumes in Clover Shares on the JSE and NSX, the Scheme Consideration represents a compelling proposition and attractive opportunity for shareholders to realise value in cash and to divest of their Clover Shares at a substantial premium to the current share price,"Clover said.

PricewaterhouseCoopers Corporate Finance, appointed as the independent expert, said its preliminary opinion was that the transaction was fear and reasonable. Clover said an independent board of directors planned to recommend that shareholders vote in favour of the transaction.

Its shares ended trade 15.1% higher at R23.01.



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