Clover will hold 51% of the new venture and Frankie's the balance. Clover has the option to acquire the remaining issued share capital in future at a purchase price to be calculated using an already agreed formula.
The transaction is in line with Clover's stated strategy to expand its portfolio of value-added and branded consumer products and provides a niche platform to entering the carbonated soft drinks market as well as the possible extension to other product categories.
Commenting on the acquisition, Johann Vorster, Clover's Chief Executive, said: "Frankie's is a much loved brand and a unique concept - consumers identify with its 'good old-fashioned' values, unique taste and distinctive brand. Apart from the brand synergies, this acquisition provides Clover with an important platform from which to launch into carbonated soft drinks and other value-added branded ranges. Our collaboration with Frankie's allows us to do so measuredly through a manufacturer uniquely positioned between niche and every day soft drinks."
Mike Schmidt, co-founder of Frankie's, stated: "This deal represents a huge opportunity for the Frankie's brand. Whilst on one hand it was an emotionally tough decision to part with the brand that Paula and I have spent the past nine years growing, on the other hand we knew that this was absolutely the right thing and, more importantly, the right time to do this deal. As shareholders in Clover Frankie's we are very confident that the brand will retain its unique character and will continue to grow from strength to strength.
"Currently Frankie's outsources its entire sales, merchandising and production function. With 80% of historical sales happening in Gauteng, KwaZulu-Natal and the Western Cape, we are confident that Clover Frankie's will benefit tremendously from the wider national footprint, additional listings and sales and merchandising expertise in Clover's distribution network.
"We are confident that with access to capital and the financial backing of the mother brand Clover, Frankie's will be able to unlock the full potential of our positioning as a distinctive retro brand with unique flavours."
The transaction is subject to the completion of due diligences and other customary suspensive conditions related to a transaction of this nature.
