Troubled (c)love(r): The General Industry Workers Union and the Food and Allied Workers Union oppose the acquisition Photo: Oupa Nkosi
The proposed acquisition of dairy company Clover by Tel Aviv-based consortium Milco is being opposed by two unions, the General Industry Workers Union (Giwusa) and the Food and Allied Workers Union (Fawu).
JSE-listed Clover has a market capitalisation of R3-billion.
The unions say the Milco acquisition could result in a jobs bloodbath at Clover, which, according to its website, employs 9 000 people.
Giwusa and Fawu have 2 000 and 2 600 of their members employed by Clover, respectively. Both have expressed concern that retrenchments will take place after a three-year period in which the unions say Milco will be prohibited from shedding any part of its labour force.
The unions have submitted objections to the buyout to the competition authorities. The Competition Commission conditionally approved the deal in June, pending final approval by the Competition Tribunal. This hearing has been set for August 14.
The competition watchdog has noted concerns regarding expected job losses after the transaction, and has proposed that the parties ensure that no Clover employees are retrenched for a certain period; that the new company create permanent positions within a certain period post-merger; and establish a reskilling fund of R10-million to give preference to older employees who may lose their jobs as a result of the buyout.
In its submission to the commission, Giwusa says the conditions put forward by the watchdog are unsatisfactory, because the acquisition is likely to negatively affect workers. “Any retrenchments in South Africa today will increase the immense hardship faced by the working class, which is already burdened by a faltering economy and the effects of state capture,” the union’s submission read.
Statistics South Africa recently announced that the country’s unemployment rate rose by 1.4 percentage points, from 27% in the first quarter of the year to 29% in the second quarter. The dairy industry has about 2 000 farmers, employs 60 000 farmworkers and provides 40 000 people with indirect jobs, according to statistics from the department of agriculture.
Giwusa said that if the Milco acquisition of Clover is successful, the company will probably “retrench a portion of its workforce [and] this will have negative implications for the attempt to alleviate poverty in South Africa”.
Although the commission did not specify the period for the conditions to be met after the transaction, the union says 512 workers are likely to be retrenched in year three, as part of the restructuring of the company.
Giwusa has also questioned Clover’s proposal to create 550 new permanent jobs through the expansion of Project Masakhane, its flagship distribution network in townships. The union claims that these employees do not enjoy similar benefits to full-time Clover employees. “Basically what is being done here is that they are swapping 512 permanent employees with cheap labour.”
In emailed responses to the Mail & Guardian, the commission’s spokesperson, Sipho Ngwema, said it does not foresee “merger-specific job losses”.
Fawu deputy secretary general Mayoyo Mngomezulu said: “The company is surviving under these extreme economic challenges that are experienced by many other companies. We were shocked to hear that it is going to be taken over by this particular Israeli company. In fact, it was a surprise.”
Mngomezulu said the union is not anti-development or against foreign direct investment, but warned that over-reliance on FDI could weaken the country’s ailing economy. “We must not rely on them [FDI] so much that if they decide to leave this country then we will be left with hollows and ashes. We must be able to balance the two so that we know jobs remain safe.”
The R4.8-billion buyout by Milco was announced by Clover in February this year. Initially, the Milco consortium, which is led by Israel’s Central Bottling Company (CBC), would hold a 60% stake in the transaction; black-controlled Brimstone would hold 15%; independent investment company Ploughshare, 11%; Mauritius-based investment firm IncuBev, 8%; and Clover management, 6%.
Clover’s share price jumped by 16% to R23.80 from R20 shortly after the buyout announcement.
But the deal faced opposition from the pro-Palestinian organisation, Boycott, Divestment and Sanctions, which threatened a boycott of Clover should the transaction with the Israelis go ahead. In April Brimstone caved in to the pressure. It announced that it would be exiting the transaction and would also sell its 15% stake in Clover.
Brimstone said this decision cost it R55-million, including R7.3-million in advisory costs.
Three months later, Brimstone announced that BEEMilk — a consortium made up of black-owned and controlled private equity and investment company Khulasande Capital, black-owned private equity firm Global Capital Empowerment Fund and Ubisi Noju — would be the replacement company.
Khulasande and Global Capital have Stephen Koseff, Investec’s co-founder and former chief executive, and current Investec joint-chief executive Fani Titi on their investment committees. Investec is a partner of Khulasande and has a 25% stake in Global Capital.
Clover has declined to comment on the acquisition until the process undertaken by the competition authorities is complete.
Thando Maeko is an Adamela Trust business reporter at the Mail & Guardian