https://www.engineeringnews.co.za

Tribunal approves Clover and Nkunzi merger with conditions

24th April 2015

By: Tracy Hancock

Creamer Media Contributing Editor

  

Font size: - +

Clover South Africa’s acquisition of Pretoria-based Ayrshire milk processor Nkunzi Milkway’s fresh dairy business has been approved, with conditions, after initially being denied last year, the Competition Tribunal announced on Thursday.

The Competition Commission was notified on September 18, 2014, of the intermediate merger through which Clover proposed to acquire the fresh dairy business, including activities relating to the production of short-life fruit juice and nondairy substitutes, and assets of Nkunzi.

However, on December 12, 2014, the commission decided to prohibit the proposed merger as it raised both competition and public interest concerns, which included the impact of the transaction on small farmers and employment.

The conditions were agreed to between the commission and parties, following an appeal filed on December 22 by the merging parties to the Tribunal.

As such, Clover would not retrench any employee owing to the merger.

The commission’s concern over retrenchments arose from the possibility that Clover would relocate Nkunzi’s Silverton facility, in Pretoria, to its Clayville facility in Johannesburg. “Clover’s business analysis has indicated that relocation would be cost-prohibitive at this stage,” the commission explained.

Clover may move certain production lines, such as 2 l Ayrshire fresh milk and Ayrshire cream, to its Clayville facility, but this was expected to have no adverse effect on employment.

Further, employees transferred from Nkunzi to Clover would be given wider career scope and opportunities across the group.

Clover would also provide employees with opportunities with regard to wholesale and retail operations learnerships, job technical training programmes at its production facilities, general upskilling of sales personnel and management – including leadership development – financial assistance for study purposes and internship opportunities.

The company intended to continue production at the existing Nkunzi facility for at least the initial three-year period of the lease agreement entered into between Clover and the landlord. Clover was attempting to renew the lease agreement beyond the initial three-year period.

Clover had the means, resources and record to relocate an operation of this magnitude with minimal impact on staff and production, should it be forced to relocate the premises when the lease agreement terminated.

The company would invest an undisclosed amount in the upgrade of the existing Nkunzi facility through the purchase of equipment and the upgrade of its Clayville facility to produce and package Ayrshire milk and cream. This investment was said to be double that which would have been made by Nkunzi over the same period.

Further, if Woolworths’ 20/20 growth plans come to fruition, Clover may need to invest a further sum to ensure that it had sufficient manufacturing capacity to meet the supermarket chains’ requirements.

The extent of Clover’s investment would be assessed on a business-case basis as required and would depend on Woolworths’ 20/20 growth plans.

Edited by Creamer Media Reporter

Comments

Showroom

M and J Mining
M and J Mining

M and J Mining are leading suppliers of physical support systems as used by the underground mining industry. Our selection of products are not...

VISIT SHOWROOM 
Werner South Africa Pumps & Equipment (PTY) LTD
Werner South Africa Pumps & Equipment (PTY) LTD

For over 30 years, Werner South Africa Pumps & Equipment (PTY) LTD has been designing, manufacturing, supplying and maintaining specialist...

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Photo of Martin Creamer
On-The-Air (15/03/2024)
15th March 2024 By: Martin Creamer

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.093 0.142s - 137pq - 2rq
Subscribe Now