Nampak purchase expands footprint in Nigeria

Date:

Nampak-logoJohannesburg – Africa’s largest packaging company, Nampak, has acquired Alucan Packaging, a beverage can manufacturing facility in Nigeria, for $301 million (R3 billion), increasing the company’s presence in the country and providing scope for further expansion.

Thank you for reading this post, don't forget to subscribe!

In an announcement yesterday, the company said the deal would be funded through available cash resources and existing debt facilities. Nampak’s shares rose by 3.32 percent to R31.77 on the JSE yesterday.

The Alucan Packaging manufacturing facility occupies 35 000m2 and has a production capacity of 1.1 billion cans a year. The facility, valued at $120m, has the potential for another production line which could produce a further 1.1 billion cans a year.

Chief executive Andrew Marshall said this deal would increase the firm’s presence in Nigeria and the rest of Africa.

“This acquisition will significantly increase Nampak’s presence in Nigeria, which is Africa’s second-largest economy and where we already manufacture food and general cans in our factory in Lagos and cigarettes cartoons, food cartons and labels at our factory in Ibadan, a few kilometres north of Lagos,” he said.

He said Nigeria had experienced good growth in demand for beverage cans and cigarettes, adding that Nampak was producing more cigarettes packaging in Nigeria than in South Africa. Apart from South Africa, Nampak also has a footprint in Angola, Botswana, Ethiopia, Kenya, Malawi, Mozambique, Swaziland, Tanzania, Zambia and Zimbabwe.

The group believes that this deal has a strategic competitive advantage as Nampak has been granted an option, valid for 10 years, to acquire the entire issued share capital of a company engaged in rigid plastic packaging in Nigeria if and when the beneficial owner elects to sell his interest.

“This acquisition and the potential to acquire the plastics company will further contribute to our stated growth strategy in the rest of Africa, where we currently operate in 12 countries generating R2.5bn in annual revenue and almost 30 percent of our trading profit,” he said.

Daniel Isaacs, an analyst at 36One Asset Management, said this was a very sizable deal and would help Nampak get closer to its target of sourcing 35 percent of its profit from Africa by 2015, but this was coming at quite a price. He noted that the purchase price of the acquisition was expensive especially because Nampak was buying what was essentially a manufacturing facility that did not possess any brand power.

Nampak said its decision to acquire Alucan at a substantial premium to net asset value was to access the Nigerian market immediately and to gain first mover advantage.

Babatunde Akinsola
Babatunde Akinsolahttps://naija247news.com
Babatunde Akinsola is aNaija247news' Southwest editor. He's based in Lagos and writes on the Yoruba Nation political issues, news and investigative reports

Share post:

Subscribe

Popular

More like this
Related

Airlines’ Blacklist Allegation Inaccurate, Maligning – Operators

July 18, 2024. Azonuchechi Chukwu. The Airline Operators of Nigeria (AON)...

Nigeria Sets Minimum Wage at $50 Per Month with Three-Year Review Cycle

After six months of intense negotiations, the federal government...

South Africa Introduces Five-Year Multiple Entry Visa for Nigerian Business Travelers

South Africa has launched a five-year multiple entry visa...

Nigeria’s Tinubu Sets New Minimum Wage at $43.015 Per Month

President Bola Tinubu has established a new minimum wage...
× How can I help you?