Nampak sells glass business for R1.5bn
Sale to Isanti Glass 1 follows several years of financial underperformance
Nampak, Africa’s largest diversified packaging manufacturer, has sold its glass business to Isanti Glass 1, an entity made up of a black-owned investment company and a local subsidiary of beer maker AB InBev (AB InBev), for about R1.5bn.
The glass business is one of two primary glass container manufacturers in SA servicing beverage and food manufacturers with an estimated market share of 25%, Nampak said.
Nampak has previously said that selling the glass business would enable it to focus on the metals business, which generates more than 60% of the company’s trading profit.
In its 2018 annual report, Nampak said it had decided to dispose of the glass business “because its financial returns have failed to meet required levels due to inadequate skills, high expenditure and high fixed costs”.
In the 2018 financial year, Nampak impaired the value of the glass business by R677m. This, according to the company, followed “a number of years of disappointing performance”.
The sale was one of the priorities to improve financial performance. Other steps included reducing overhead costs and consolidating plastic plants.
Nampak CEO André de Ruyter said the company would continue to rationalise its portfolio to improve returns on capital.
“Proceeds from this disposal will be primarily used to reduce both local and international interest bearing debt and strengthen the company’s financial position,” De Ruyter said.
Nampak said the transaction was subject to various conditions including the approval of SA competition authorities.
“It is not anticipated that the suspensive conditions will have been met before the Nampak 30 September 2019 year-end,” the company said.
Nampak Glass operates three furnaces at its manufacturing facility in Roodekop, Gauteng. It has a sales and marketing presence in the Western Cape. The division serves a broad market of local and multinational customers in the beverage and food industries.
Nampak said Isanti Glass 1 was 60% owned by black-owned and managed investment firm Kwande Capital, while SABSA Holdings owned the other 40%. Kwande, which was established in 2010, focuses on investing in companies with high growth potential in sectors such as manufacturing and oil and gas.
SABSA is the holding company of SA Breweries and a wholly owned indirect subsidiary of AB InBev, the world’s largest beer company.