Competition Tribunal approves Nampak liquid cartons disposal

SA’s competition authorities have approved the disposal of Nampak’s liquid cartons business to a newly formed entity, though certain conditions need to be fulfilled.

The regulatory approval is a welcome boost for SA’s biggest beverage can producer, which has been implementing an asset disposal programme to reduce debt.

Nampak signed a deal in March to sell the liquid cartons business for R450m to Liquid Cartons (LC) on the locked-box construct — set at October 1 2023 — with the final price being subject to a working capital locked-box calculation and a daily interest adjustment.

LC is a newly established firm whose controllers are active in the private equity space, among others things funding packages for medium to large leveraged buyouts, buy-ins and growth capital solutions.

On Friday, the Competition Tribunal gave the deal between Nampak and LC the go-ahead but imposed conditions to address concerns about employment and competitively sensitive information.

Nampak manufactures the unique Conipak carton as well as a wide range of Pure-Pak cartons for milk, fruit juice, wine, mageu, sorghum beer and drinking yoghurt products. After the merger, LC will control the liquid cartons business.

The proceeds from the sale are expected to go towards settling debt. Nampak’s net debt totalled R4.6bn at the end of the six months to March. By the end of September, R477m will be owed to Nampak lenders, with funding expected to come from disposals.

The JSE-listed manufacturer with a R3.2bn market capitalisation recently completed the disposals of the Tanzania, NIL UK apartment and Nampak Nigeria properties, while signing sale and purchase agreements for Bevcan Nigeria, SA Plastic and other minor asset disposals.

In 2023, the crates business was sold for R35.3m. In February, agreements were signed for the R65m sale of the liquids and drums business. The closures business (plant, equipment and inventory only) was sold for R12m in March.

Divestiture initiatives have concluded disposals of R2.1bn and, according to CEO Phil Roux, have been tracking ahead of the internally set time frames to complete these disposals. The proceeds from all disposals will be used to repay debt and reduce gearing.

The company’s other discontinued operations include Nampak Packaging Malawi and Nampak Zambia, as well as the SA Plastic and Tubes businesses. The group has said negotiations for the disposal of the tubes business were at an advanced stage.

As Nampak continues its turnaround plan — which has included board and management changes, a business model review, a capital and debt restructuring programme, a rights offer and the adoption of a new strategy focused on the core metals business — the group is upbeat about Metals SA’s improved profitability as the operating margin expanded from 5.2% to 12.3%.

After Bevcan Nigeria is disposed of in the second half of 2024, Nampak anticipates reaping benefits from the R2.2bn attributable foreign currency translation reserve.

Nampak shares slipped 4.28% to R375.06 on Friday, having risen 100% since the start of 2024.

gumedemi@businesslive.co.za