Clover Managers Back Bidders With Africa Expansion Plans

(Bloomberg) -- 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 Vorster said 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 five 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 traded 1.5 percent lower at 22.32 rand at 3.46 p.m. on Tuesday. That values the company at close to 4.3 billion rand.

To contact the reporter on this story: Loni Prinsloo in Johannesburg at lprinsloo3@bloomberg.net

To contact the editors responsible for this story: Rebecca Penty at rpenty@bloomberg.net, Paul Richardson, John Bowker

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