SOUTH AFRICA – Clover SA, a branded consumer goods company active in the food and beverage industry, has gotten a node from the Competition Commission of South Africa to acquire milk procurement business, Dairy Farmers of South Africa.
The commission has conditionally proposed the Competition Tribunal to approve the proposed deal that will see Clover SA take full ownership of DFSA, which provides raw milk procurement services to it.
DFSA procures regular raw milk from milk producers predominantly located in KwaZulu Natal, Eastern Cape, and the Highveld.
Its operations include buying milk from farmers, transporting raw milk from farmers to the factories for cooling down, quality checks, as well as administrative, financial and contract management services.
The commission said the merging parties had agreed not to effect any retrenchment for three years from the approval date, addressing employment concerns.
“Clover has also committed to making additional investments in training and skills development as well as enterprise development over a five-year period post-merger,” the CompCom said.
It further highlighted that Clover would maintain existing milk procurement contracts with current suppliers for five years, on condition that they continue to supply regular raw milk to Clover at market-related prices.
“Lastly, Clover will make available to its competitors regular raw milk that is surplus to Clover’s own requirements at market-related prices,” it said.
DFSA was initially a full subsidiary of Clover but was later split, with its milk producers allotted a 74% stake while Clover retained a stake of 26%. The company finally disposed of its remaining investment to the Milk Producers Trust in May 2020.
The entity was split from Clover as part of the milk producer’s effort to drive more volumes of raw milk to increase profitability. It also sought to streamline the business, and to focus on its value-added offering.
Later in 2020, Dairy DFSA merged with Coega Dairy to form Dairy Group South Africa.
DFSA’s product portfolio comprises non-value added fresh and long-life milk products, whereas Clover focuses on value-added products.
Clover SA has subsidiaries across South Africa, Botswana, Namibia, and eSwatini and operates in various manufacturing facilities across Gauteng, the Free State, KwaZulu-Natal, the Eastern Cape and the Western Cape, and has an extensive network of distribution warehouses and fleets throughout South Africa.
Its focus is on the manufacturing and supply of dairy products, soy products, olive oil, peanut butter and mayonnaise and the production of non-alcoholic beverages as well as sales, merchandising and distribution of consumer goods.
The company is controlled by Clover Proprietary Limited, which is ultimately controlled by Central Bottling Company Limited, a company incorporated in Israel.
In addition to Clover S.A., Clover controls the following firms: The Real Beverage Company; Clover Milkyway; Clover Pride; Clover Waters; Clover Fonterra Ingredients; and Clover Good Hope.
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