JSE-listed Clover Industries’ share price shot up as much as 18% on Friday after the company reported it is in negotiations with a third party for its potential acquisition. Tough trading conditions for SA food producers is squeezing margins and raising the prospects of consolidation, analysts said, while Clover may have become more attractive due to progress in its restructuring efforts. SA’s largest dairy producer, which has a market capitalisation of R3bn, is in the midst of a pivot from its core dairy business to focus on value-added products, as well as nondairy food products such as olive oil.

The interested party is unlikely to be Tiger Brands, which has its own share of problems and is trying to bring down the number of products already in its portfolio, said Ron Klipin, portfolio manager of Cratos Wealth. Interested parties could include Zeder, which may be looking to diversify from its holdings in Pioneer Foods, he said. Clover is likely to be attractive to private-e...

BL Premium

This article is reserved for our subscribers.

A subscription helps you enjoy the best of our business content every day along with benefits such as exclusive Financial Times articles, Morningstar financial data, and digital access to the Sunday Times and Times Select.

Already subscribed? Simply sign in below.

Questions or problems? Email helpdesk@businesslive.co.za or call 0860 52 52 00.