Nampak, a South Africa based diversified packaging manufacturer, has sold its glass business to Isanti Glass 1 for about R1.5 billion (US$125 million).
Isanti Glass 1 is 60% owned by investment firm Kwande Capital, while SABSA Holdings, subsidiary of AB InBev owns the other 40%.
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%.
Selling the underperforming 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”.
Nampak impaired the value of the glass business by R677m (US$44 million). 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.
“We continue to rationalise the portfolio to optimise and improve returns on capital and reinforce our strategic intent. 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 Glass operates 49 facilities worldwide and operates three furnaces which supply nine forming lines at its manufacturing facility in Roodekop, Gauteng.
Nampak said it would continue to own and operate the glass business until the effective date of the sale.
The consideration is payable in cash and consists of R992 million (US$65m) for the property, plant and equipment plus the value attributable to agreed levels of networking capital of the business as at the closing date.
Nampak said the transaction was subject to various conditions including the approval of SA competition authorities.
Kwande Capital, the majority shareholder in Isanti Glass 1, was established in 2010, focusing on investing in companies with high growth potential in sectors such as manufacturing and oil and gas.