Brimstone pulls out of Clover deal due to Israeli connection


Brimstone pulls out of Clover deal due to Israeli connection

Published Date: 2019-04-15 | Source: Stephen Gunnion | Author: Stephen Gunnion | Comments

Brimstone pulls out of Clover deal due to Israeli connection

The empowerment group bowed to shareholder and community pressure due to the inclusion of an Israeli company in the transaction.

Brimstone has withdrawn from a deal to buy a 15% indirect stake in Clover following pressure from shareholders and communities.

The empowerment group said it had reached an agreement with Milco and consortium leader International Beer Breweries Limited (IBBL) to facilitate its exit from the R4.8 billion transaction. IBBL, a subsidiary of Israeli beverage maker and distributor Central Bottling Company, will take up a 59.5% stake in the newly-formed Milco. Its involvement drew opposition from Boycott, Divestment, Sanctions against Israel in South Africa (BDS SA), an organisation promoting solidarity with Palestinians. After the deal was announced in February, there were reports of intimidation on Clover and Brimstone's management. It also didn't sit well with some of Brimstone's shareholders and trade unions including the Food and Agricultural Workers Union, who have threatened to boycott Clover products if the deal goes ahead. BDS SA threatened direct action and a militant, but peaceful campaign.

Brimstone said a back-stop agreement would see IBBL or its affiliates take up its stake if it wasn't able to find a suitable empowerment investor by the end of the year. That means it may, for a short period of time, hold an interest in Milco SA. Other investors include Africa-focused food and beverage group IncuBev, investment group Ploughshare Investments and Clover management.

Brimstone said its share of the transaction costs in relation to its exit from the Clover deal wasn't expected to be material in relation to its intrinsic net asset value. It's in the process of obtaining a ruling from the JSE on the regulatory implications of its exit from the deal and says shareholders should continue to exercise caution.

Brimstone's shares didn't trade on Friday, closing unchanged at R10.40. Clover fell 0.4% to R23.25. The Milco offer is worth R25 per share.

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