UPDATE: Clover, Milco assessing Competition Tribunal's conditions
Clover and Milco SA are reserving their right to appeal the conditions attached to approval of Clover's takeover, but don't anticipate this will have any impact on implementation of the deal, they said on Thursday.
On Wednesday, the Competition Tribunal gave the go-ahead to a takeover by Milco SA of South Africa's biggest dairy company. The R4.8bn takeover was subject to a range of conditions, including employment, local procurement and information sharing conditions.
In an announcement on the JSE Stock Exchange News Service (SENS) Clover and Milco SA said: "The Parties to the Clover Scheme have agreed that, notwithstanding the conditions attached by the Competition Tribunal of South Africa to its approval, the Clover Scheme condition precedent requiring competition authority approval has been fulfilled.
"The parties are, however, assessing the impact of the deviation by the Competition Tribunal from the conditions proposed by the parties and reserve their right to appeal the conditions in due course, but any such appeal with have no impact on the implementation of the Clover Scheme."
A joint finalisation announcement would be released in due course, the added.
The consortium, led by Tel Aviv-based Central Bottling Company - the biggest shareholder in Milco - made the offer to buy out Clover at R25 a share in February 2019. Other investors included Brimstone Investment, which in April pulled out following a protest by pro-Palestinian activist groups.
In its statement on Wednesday, the Tribunal said it had initially had concerns about the impact on employment. A total of 516 employees had been set to be retrenched as a result of the completion of Clover's so-called Project Sencillo, a project aimed at ensuring its assets, including factories, production lines and vehicles, were better utilised.
Clover has previously told Fin24 Project Sencillo is unrelated to the merger. It also said it had managed to reduce net job losses to a maximum of 277 positions.
This is partly because Milco has undertaken to to create 550 new permanent jobs over a period of five years from the the approval of the deal through the expansion of Clover's Masakhane Project, which involves servicing underserved markets such as general traders and spaza shops, Fin24 previously reported.
According to the Tribunal, other employment-related conditions agreed to include that the merged entity will not retrench any employee in SA as a result of the merger (this excludes Project Sencillo) and reasonable relocation and training costs will be contributed for affected employees that successfully apply for vacant or new positions in Project Masakhane. The merged entity would cover the costs of training and relocation up to R5m respectively, the Tribunal said.
To address concerns from local suppliers to Clover of bulk juice concentrate, the merged entity agreed to procure bulk juice concentrate from local suppliers for three years.
Cosatu and the trade union Food and Allied Workers Union (FAWU), as well as the General Industrial Workers Union of South Africa (Giwusa) are opposing the deal, as is the pro-Palestine activist group Boycott Divestment Sanctions SA (BDS SA).
If the takeover proceeds, BDS SA says it will launch "a militant but peaceful campaign", including protests and disruptions against Clover and a boycott of all its products.
* This story was updated at 16:00 on 26 September to reflect the contents of Clover and Milco SA's SENS announcement.