The group’s shares tumbled to R325.81, down from Monday’s closing price of R363.96 a share. It later closed 9.50% lower at R329.40.
Jordan Weir, an equities trader at BayHill Capital, said the decline was a result of a correction of a Sens announcement regarding the erroneous trade executed during the closing auction on Monday evening. “The party involved logged the cancellation of the trade to the JSE shortly after closing hours on Monday in order to correct the error. The Sens announcement was taken quite negatively by Mondi shareholders,” Weir said. “Furthermore, as the trade may have had an effect on Mondi’s closing price on Monday and impacted trades in the closing auction, we have seen investors trading with relatively negative sentiment this morning.”
On Monday the group announced its intention to acquire an industrial bags producer in Egypt. It said it had signed an agreement to acquire 100% of the outstanding shares in National Company for Paper Products and Import & Export (NPP) in Egypt, for a total consideration of 23.7million (R358.24m) on a debt and cash free-basis.
Mondi said the transaction was subject to customary closing conditions and was expected to complete during the first half of 2018.
NPP is a privately owned industrial bags producer which operates one plant in Giza near Cairo, and is serving mostly regional customers.
Recent acquisitions also include an intention to acquire 100% of the outstanding shares in Powerflute Group Holdings Oy (Powerflute) for a total consideration of 365m on an enterprise value basis. Powerflute is a division of Nordic Packaging and Container Holdings (NPAC Holdings).
Powerflute operates an integrated pulp and paper mill in Kuopio, Finland with an annual production capacity of 285000 tons of high performance semi-chemical fluting.
In the year to end December results, Mondi reported 7% increase in revenue to 7.10billion, with volume growth reported in the paper businesses, Packaging Paper. Underlying earnings before interest, tax, depreciation and amortisation was up by 6% to 1.44bn.
The group has approved more than 750m in major capital expenditure projects for the year, which are in progress as it seeks to secure a strong growth pipeline. It said acquisitions totaling more than 400m have been completed or announced, expanding the group’s product offering to better serve its customers.
Weir said the shares fell after the JSE’s directorate of market regulation announced that any trades resulting from Mondi’s closing auction on Monday had been canceled.
“This is positive for Monday’s share buyers, but not good news at all for the sellers,” he said.
- BUSINESS REPORT ONLINE