The Kimberly-Clark-Lion Match partnership is the latest BEE deal to come unstuck.

Bruce Whitfield:
A growing number of BEE deals seem to be coming unstuck. Now I wonder whether or not that is what happened at Kimberly-Clark, Kimberly-Clark of course the US headquartered firm that has got operations in South Africa, it makes lots of consumer products. Garth Towell is the managing director of Kimberly-Clark in South Africa. Garth, you did this BEE with the Lion Match company, something like 10 years ago.

Garth Towell:
Hi, good evening to you Bruce. To put a bit of context to this, it was as you correctly state one of the first BEE deals of its kind in the fast moving consumer goods industry back in 1999 and the shareholders have added tremendous value over the past decade however Kimberly-Clark was approached at the back end of last year about potential sale and purchase back of their shareholding, Kimberly-Clark has the first rights as per the shareholder agreement.

Bruce Whitfield:
Okay so Lion Match company what sort of stake did it have in Kimberly-Clark South Africa then?

Garth Towell:
Just less than 50 percent.

Bruce Whitfield:
And they have sold down that stake now to what?

Garth Towell:
Well they have sold the entire stake to Kimberly-Clark so Kimberly-Clark Corporation now holds 100 percent of this affiliate.

Bruce Whitfield:
Which now puts you in the position of having to find yourself a new BEE partner because that is simply the way business has to be done in South Africa.

Garth Towell:
That is correct.

Bruce Whitfield:
Now did they make money out of this investment?

Garth Towell:
Yes I would say that we added tremendous value to the investment back a decade or so ago.

Bruce Whitfield:
How much did they invest initially and how much did they actually sell that stake for now?

Garth Towell:
The terms of the deal haven't been disclosed Bruce, but it is substantial.

Bruce Whitfield:
Is this as a result of the fact that Kimberly-Clark’s growth in South Africa just hasn't been sufficiently spectacular to entice Lion Match to stay invested and they have simply looked to put their capital elsewhere perhaps, to get better growth?

Garth Towell:
There has been a changing of their own business priorities, obviously I can't elaborate on that. I think primarily, certainly the business has delivered in terms of the investments and the value that we have added to the investment but I think perhaps some of the synergies that they identified a decade or so ago between the Lion Match company and Kimberly-Clark haven't been fully realised, synergies in distribution, selling expense etc. It is probably not the most appropriate thing to be putting matches and toilet tissue together.

Bruce Whitfield:
Perhaps not and one would have thought that somebody would have thought about that initially when the deal was done but here is a deal, it's a decade old, it is done and dusted now. They have come out of the deal hopefully better off than when they went in. What do you do now in terms of your BEE requirement?

Garth Towell:
Well, I think we certainly are able to evaluate our options, Kimberly-Clark obviously looked at this in terms of their overall global and regional footprint, wanted to bolster their presence on the continent, it is a vote of confidence in the local management, the local business potential, and the country for that matter. It puts us in a position to evaluate our options but we remain committed to transformation and empowerment. It is a very positive transaction for the local business.

Bruce Whitfield:
Would you do another 50 percent BEE deal or would you go for the minimum perhaps, 20 percent instead?

Garth Towell:
I wouldn't want to limit us to anything at this stage but we will consider all options.

Bruce Whitfield:
Garth Towell, thanks very much indeed, the managing director of Kimberly-Clark South Africa.