Nampak is selling a 51.43% stake in its Zimbabwean unit to TSL for $25 million, pending certain conditions. TSL will make a mandatory offer to remaining shareholders. The divestment aligns with Nampak’s asset disposal strategy, as the Zimbabwean economic situation presents ongoing challenges for Nampak Zimbabwe, including declining revenues and rising operational difficulties.
Nampak, the South African packaging company, has entered into agreements to sell its Zimbabwean unit to TSL, a logistics firm based in Harare. The sale involves a 51.43% stake in Nampak Zimbabwe, amounting to a total transaction value of $25 million. The agreement is now pending various suspensive conditions that need to be met before finalizing the transaction, which is anticipated to be announced in the coming weeks.
As per the Companies and Other Business Entities Act and the Zimbabwe Stock Exchange Listings Rules, TSL is obliged to extend a mandatory offer to the remaining shareholders of Nampak Zimbabwe. TSL confirmed its readiness to fulfill this obligation either via cash or a share swap using its own shares, independent of Nampak’s involvement.
The decision to divest the Zimbabwean unit is part of Nampak’s asset disposal strategy. Nampak Zimbabwe is currently engaged in cost-control measures as it navigates a challenging operational environment exacerbated by policy changes and currency fluctuations. Managing Director John van Gend noted the complexities stemming from recent currency policy changes, which have hindered timely financial reporting.
Amidst the economic downturn in Zimbabwe, Nampak Zimbabwe is concentrating on maintaining profitability by implementing cost-containment measures. The company reported a decline in demand for packaging materials this past quarter, attributed to increased competition and supply chain disruptions caused by civil unrest in neighboring Mozambique.
In addition, the economic instability in Zimbabwe is expected to further diminish demand as businesses in the wholesale and retail sectors contend with significant closures. Nampak Zimbabwe experienced a notable 23% decrease in revenues in US Dollar terms during the last quarter, and trading profit fell by 56%, highlighting the struggle amidst a volatile financial landscape.
In summary, Nampak’s decision to sell its Zimbabwean division to TSL reflects strategic asset management in a difficult economic climate. With TSL required to offer shares to remaining stakeholders, Nampak Zimbabwe faces ongoing challenges, including reduced demand and financial volatility. The company’s focus on cost containment is critical for sustaining profitability amid increasing operational complexities.
Original Source: www.newzimbabwe.com
