Clover Industries’ move for fellow South African dairy firm Nkunzi Milkyway has been cleared – with conditions – by the country’s competition authority.
The deal, struck last September, had been blocked by South Africa’s Competition Commission over fears it would affect farmers.
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However, Clover and Nkunzi appealed to the country’s Competition Tribunal, which has given the green light to the transaction as long as the companies follow certain conditions.
Among the stipulations set by the Tribunal, Clover must not “retrench” any employee. The Commission had been concerned Clover could relocate Nkunzi’s facility in Pretoria to Johannesburg. Clover plans to continue production at the Nkunzi site for three years and is looking to renew the lease for “a further period”, the Commission said. Clover may move some production lines but any transfer should “have no adverse effect on employment”, the conditions read.
Clover chief executive Johann Vorster said: “The Commission initially expressed concern over the impact of the transaction on small farmers and on employment. Through continued engagement, Clover is happy to have addressed these concerns satisfactorily.”
Vorster said Clover had committed to invest in the business, which is a supplier to local retailer Woolworths Holdings for products to be sold under the grocer’s Ayrshire brand.
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By GlobalData“Clover will in addition invest significantly in production capacity and facility upgrades, which will in part be driven by Woolworths’ 2020 growth strategy. At the same time, Clover will take over existing Nkunzi supply agreements with producers on the same terms and conditions, or renegotiate supply agreements on an individual basis with producers,” he said.
