Brimstone bows to BDS, but it’s milk and honey as Clover deal continues

NICOLA MILTZ

Johannesburg Stock Exchange-listed Brimstone Investment Corporation is bowing out of the multibillion rand, foreign direct investment (FDI) deal led by Tel Aviv based Central Bottling Company (CBC) to buy South Africa’s biggest dairy producer. This comes after huge pressure by anti-Israel lobby groups. But the deal is still on the cards, say insiders, and CBC is leading the transaction as the biggest shareholder in the MilCo consortium (the entity that has offered R4.8 billion to buy Clover Industries).

Grave threats and intimidation by BDS-SA and other anti-Israel lobby groups has taken its toll on Mustaq Brey, the chief executive. A devout Muslim businessman and philanthropist, his life has been turned upside down by pressure from within his own community.

The charitable executive, who is known to support a range of worthy causes including the Chevrah Kadisha, is believed to have sought refuge in India for weeks following his ordeal.

Brey and his partner, Fred Robertson, the executive chairman and co-founder of the successful, proudly South African company, visited Israel in January this year to inspect the operations of CBC.

Brey worshipped at the Al-Aqsa Mosque – one of the holiest sites in Islam – located in the Old City of Jerusalem. They visited several other holy sites, including the Kotel (Western Wall), toured Jaffa, and other parts of the country.

They were said to be highly impressed with the country and CBC. An excited Brey hailed the future transaction, in which Brimstone would have a 15% stake in MilCo SA. He said the deal would bring foreign direct investment into South Africa, which was so necessary “if we wish to achieve the economic freedom our country deserves”.

The Israeli company would have a 59.5% stake in the consortium.

However Brey’s excitement was short-lived. No sooner had the announcement been made about the buyout offer, than BDS-SA and other Palestine solidarity groups mobilised a forbidding campaign to smear CBC and scupper the deal from taking place. Anti-Israel lobbyists accused CBC of being complicit in human-rights abuses and violating international law.

Brimstone was forced to reconsider its participation after noting the “widespread outrage”. The consortium, however, has reiterated its commitment to the deal in spite of this unwelcome setback.

Meanwhile, the home-grown empowerment investment company is in advanced talks with a black economic empowerment firm to acquire Brimstone’s stake in the Clover consortium. This move would result in Brimstone exiting its full shareholding of MilCo SA.

In all likelihood, a deal will forge ahead with a new company that, according to insiders, is not going to entertain BDS’s threats.

Brimstone said that should a suitable replacement not be in place by the end of the year, another partner in the consortium would acquire its stake.

BDS-SA milked the news of Brimstone’s exit.

In a celebratory statement, it said it commended the leadership of Brimstone for having interacted with it, and for “following through with its exit” from the deal.

The organisation said it “saluted” all those who it said “engaged” on the issue.

Notwithstanding Brimstone’s exit, the organisation said that “if the Israeli take-over proceeds” it would actively support or initiate a call for direct action and a “militant but peaceful” campaign, including “protests and disruptions” of Clover, and would boycott all of its products.

The lucrative deal, which would benefit South Africa’s ailing economy and help boost employment, has been publicly opposed by the Congress of South African Trade Unions (Cosatu) and the Food and Allied Workers Union (Fawu), among other Palestinian solidarity organisations.

Earlier this year, the Department of International Relations and Cooperation (Dirco) tried to stop the anti-Israel lobby from attempting to scupper the much-needed FDI deal. Dirco said South Africa was “open for business”. This occurred in the same week that President Cyril Ramaphosa made it clear that the government was continuing its drive to attract FDI to South Africa.

However, this stance was fiercely contradicted when Dirco Minister Lindiwe Sisulu two weeks ago told foreign dignitaries that South Africa was in the process of downgrading all relations with Israel, including trade relations.

Brimstone’s profit fell by nearly half. The company released its results last month for the year ended 31 December 2018, reporting a profit of R71.3 million, down from R141.7 million for the prior year – a drop just short of 50%.

Brey told Fin24, “We still believe we are good at what we do. We believe we have quality assets. It is a long-term thing. The market will come right, and then we will be ok.”

According to a Stock Exchange News Service (SENS) release on 12 April, Brimstone’s share of the transaction costs in relation to its exit from the Clover transaction is not expected to be material to its intrinsic net asset value.

CBC, which is Israel’s leading manufacturer and distributor of popular beverages including Coca-Cola, Fuze Tea, Tuborg, and Carlsberg beers, sees the Clover deal as a way of expanding its operations in Africa. Clover, meanwhile, has 8 000 employees and operates 13 plants.