Nampak completes sale of Bevcan Nigeria business

NIGERIA – Nampak, a leading African packaging producer, has completed the sale of its Nigerian subsidiary, Bevcan Nigeria, to Singapore-based Alucan Investment.

This transaction, valued at US$68.5 million (R1.25bn), marks a significant step in Nampak’s strategy to streamline operations and reduce debt.

Nampak acquired Bevcan Nigeria in 2014 for US$180.6 million, indicating a substantial loss on the sale.

The decision to divest was influenced by several factors, including economic challenges in Nigeria, such as the removal of fuel subsidies and the devaluation of the Nigerian naira, which adversely affected Nampak’s financial performance in the region.

The proceeds from the sale are earmarked to reduce Nampak’s debt, thereby improving the company’s financial stability.

The first tranche of US$58.2 million is expected to be received on January 31, with an additional US$10 million payable by February 7.

This strategic move is anticipated to enhance Nampak’s risk profile and provide greater flexibility for future investments.

In the fiscal year ending September 30, 2023, Nampak’s Nigerian assets reported an attributable loss of R2 billion (US%107.18m), including a goodwill impairment of R1.55 billion (US$83.06m).

By divesting from the Nigerian market, Nampak aims to focus on its core operations, particularly in South Africa, to unlock further shareholder value and strengthen its position in the African packaging industry.

The market has responded positively to Nampak’s exit from Nigeria. Following the announcement of the sale, Nampak’s shares experienced an 18% increase, reflecting investor confidence in the company’s strategic direction and financial restructuring efforts.

The completion of the Bevcan Nigeria sale represents a pivotal moment for Nampak as it seeks to enhance its financial health and operational focus.

By divesting from a loss-making subsidiary, Nampak is positioning itself for sustainable growth and value creation in its core markets.

Last November, the company announced sale of its Industrial & Commercial Solutions (I&CS) business, valued at R142.5 million (US$8.1m).

This decision aligns with the company’s broader strategy to divest non-core assets as it seeks to reduce its considerable debt burden.

Nampak initiated this asset disposal plan last year amid growing financial challenges due to high debt levels and operational inefficiencies in certain segments.

I&CS, focused on industrial inkjet printing, laser marking, and case coding, has been a smaller part of Nampak’s operations.

Although the buyer has not been disclosed, the funds generated from this sale are expected to help Nampak streamline its portfolio and focus more on core packaging areas such as beverage and food packaging across Africa.

This sale is also one in a series of recent disposals, including its Nigerian subsidiary in May 2024, which underscored Nampak’s strategic intent to focus on businesses that offer stronger profitability and align more closely with the company’s long-term goals.

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