Clover Industries Ltd. received a buyout offer from investors led by Israel’s Central Bottling Co. that values the South African company at 4.8 billion rand ($359 million), giving a boost to President Cyril Ramaphosa’s effort to lure foreign investment to the country.
The shares rose as much as 21 percent to a record 24.22 rand, extending gains since Clover first said it was the target of takeover interest in October. The deal has been recommended by the company’s independent board, led by Steve Booysen, one of the executives working to revive scandal-hit retailer Steinhoff International Holdings NV, and also including former Shoprite Holdings Ltd. Chief Executive Officer Whitey Basson.
Clover has a “strong portfolio of brands and best distribution system in South Africa,” Richard Izsak, CBC’s chief of staff, said in a phone interview. “We want to build the company for the long term.”
While foreign takeovers of South African listed-companies have been a rarity in recent years, Ramaphosa has made clear since he took over the presidency 12 months ago that international investment is a centerpiece of his plans to revive the economy. Challenges include weak economic growth, fueled by high unemployment and stretched household incomes, while five countries, including the U.S. and the U.K., have warned that ongoing corruption scandals are a barrier to investment, according to the Sunday Times.
Regarding the economy, CBC is “investing for long term, even if there are some ups and downs in the short term,” Izsak said. Furthermore, the acquirers plan to boost Clover’s presence in sub-Saharan Africa, taking products such as the company’s own-branded milk and cheese and soft drinks such as Tropika to a wider customer base. Clover has the potential to play a major role in the development of retail economies in South African townships, Izsak said, referring to poor settlements typically found on the outskirts of major cities.
The dairy producer currently gets about 10 percent of revenue outside South Africa, CDC CEO Aran Oelsner said in the same phone interview. Clover traces its roots back to the late 19th century and a collective of local dairy farmers.