Clover’s board said in a statement that a catalyst for this expansion was de-linking Clover Industries’ ordinary shares from the quota agreement with producers (who constitute about 85% of Clover’s shareholders), and the collapse of its ordinary and preference share structures.Clover said this alignment of all stakeholders would enable the company to grow faster, thereby benefiting producers who support the initiative.
“Clover’s listing on the JSE probably won’t have any immediate effect on the milk price to suppliers,” said Milk Producers’ Organisation chairperson Dean Kleynhans. But he added a listing could raise shareholder expectations to generate profits. “To increase its profit margin, Clover might be tempted to lower the price it pays for milk it buys from producers,” he said.
Kleynhans said producers who currently hold shares in Clover could benefit from the listing, as share prices could increase. He suggested they hold on to their shares, or even buy more.
“The best route forward would be for dairy farmers to remain the majority shareholders in the company, otherwise the role the producer currently plays in decision-making will become smaller,” said Kleynhans. Clover spokesperson Morne Reinders said the company’s planned expansions involve relocating certain production lines closer to the coastal milk-producing areas and servicing the growing demand for branded food products as South African consumers become wealthier. Clover is also investigating further growth in Africa, specifically Nigeria.
