A takeover of South African dairy group Clover Industries by a consortium of investors known as Milco has been approved by a competition tribunal with conditions attached centred on employment.
Clover had been the subject of a buyout since February by International Beer Breweries – a subsidiary of the Central Bottling Company – IncuBev, Ploughshare Investments, and the firm’s management. Brimstone Investment Corporation, which was part of the initial investment group, pulled out in April.
The company is South Africa’s largest dairy firm producing branded products such as milk, yogurt, cheese and butter for local and international markets.
Earlier this month, the Johannesburg-listed company said it would eliminate 277 jobs as part of a cost-efficiency drive but stressed the potential cuts were not connected with the takeover bid. Moreover, it stated it was committed to create 550 new positions over the next five years under phase two of its Project Sencillo initiative, leading to net new roles of 273.
It had also agreed with the Milco consortium steps to mitigate the impact on employees, including limiting job losses to 277 under phase two of the project; to keep the number of retrenchments from Project Sencillo “as low as practically possible; to not cut any jobs until after two years of the Milco transaction being approved; and to create 550 positions over five years as the company expands its Masakhane Project.
Still, the deal, which will see Clover renamed Milco and the retention of the brand name, was referred to South Africa’s competition commission, with the decision and associated conditions outlined today (25 September) by the tribunal.
The tribunal has approved the transaction on the condition the retrenchment period for the 277 workers is extended to three years after the deal is completed from the proposed two. And that Clover covers “reasonable relocation and training costs” for affected employees who successfully apply for a vacant or new position in Project Masakhane.
Further, all affected workers will be offered the opportunity to apply for and will receive preference in relation to any new vacant Clover positions. For employees who do not wish to apply for new positions, Clover must offer a severance package of two weeks for each year of service and honour any promised bonuses or leave.
Also, in terms of Clover purchases of juice concentrate from existing local suppliers, the tribunal ruled the company should continue to source product from them for three years after the deal’s completion.