Africa’s JSE-listed largest diversified packaging manufacturer Nampak said negotiations to dispose of its glass business was on track as it yesterday issued a second cautionary to its shareholders about the possible disposal following an earlier announcement in February.
Nampak informed shareholders then that it was disposing of its glass business and it had been in exclusive negotiations with a preferred bidder who had secured funding for 100 percent of the anticipated divestiture value.
Nampak initially aimed to conclude a purchase agreement and sale by the end of April and it had preferred to dispose of the unit to a black-owned South African company.
“We are pleased to advise that there has been significant progress in the negotiations in respect of the potential disposal of the Nampak Glass business.
"The parties are still fully committed to concluding the transaction,” Nampak said.
However, the group stressed that the transaction, if concluded, will be subject to competition authority approval.
Nampak, which has footprints in eleven African countries, said the disposal was subject to customary closing conditions, including local regulatory approvals.
In the six months to end March results, the group decided against the resumption of paying a dividend until the sustainability of cash transfers from Zimbabwe were assured and the disposal of the glass business was finalised.
The decision came at the back of an 18 percent decline in trading profit to R959 million at the end of March, due to beverage cans volumes dropping and consumer demand tumbling across the entire continent.
Nampak entered into a definitive agreement with AR Packaging Group for the disposal of its subsidiary Nampak Cartons Nigeria for an undisclosed amount, with chief executive André de Ruyter stating that the disposal was in line with Nampak’s ongoing strategy to sharpen its focus on strategic underlying businesses.
Proceeds from the Nigeria business disposal were expected to strengthen the company’s financial position.
Nampak share price was almost up by 2 percent to R11.08 a share yesterday morning after the group announced that the talks were still in progress.
The stock finally closed 0.55 percent up at R10.96 at the end of the day on the JSE yesterday.