Amcor – AFSA Set to Acquire Nampak’s Flexible Packaging Business

The intermediate merger, where Amcor Flexibles South Africa (AFSA) plans to get hold of Nampak’s flexible packaging business, is set to be realised.

This is facilitated by the approval, without conditions, of the South Africa Competition Commission.

After the acquisition, Amcor will have sole control over Nampak Flexibles, South Africa’s market leader in flexible packaging. This acquisition is worth USD 22 million (ZAR 250 million).

The Amcor Acquisition will generate a Lot of Interest Among the Flexible Packaging Industry
The news of this merger has created a lot of interest in the profile of both these companies. Amcor is a multinational packaging company, with a worldwide presence in 43 countries, across over 180 sites.

It is a leading name in responsible global packaging solutions.

It supplies a variety of flexible and rigid packaging products for the healthcare, food and beverage as well as home and personal care industries.

Nampak Flexibles has three plants with extrusion, conversion and lamination capabilities. It manufactures, prints, sells and distributes a variety of flexible packaging products in South Africa.

The approximate sales figure of the company per annum stands at USD 94 million (ZAR1.1 billion).

Nampak Flexibles serves clients across different industries. These include domestic and leading multi-national customers in the food and beverage, pharma/healthcare, and home care end markets.

Its products are also exported to other African countries.

According to Amcor’s M.D and CEO Ken MacKenzie, this merger will give the African region a platform for growth. In a statement in March, he lauded Nampak’s experienced management team and said the company is the market leader in South Africa.

He added how the company services several existing global customers of Amcor. This, he said, creates an opportunity to leverage Amcor’s design and product innovation capabilities into the market.

Nampak’s CEO – André de Ruyter, said in a statement that the disposal of its flexible packaging business was a part of Nampak’s portfolio optimisation plan. He said the move was aimed to unlock cash from low-margin business and redistribute it into high-growth and high-yield opportunities in the rest of Africa.

Though Nampak Flexibles is profitable, with margins varying between 3% and 4%, it’s nowhere close to Nampak’s margins for other African businesses, which are between 18% and 20%.

7 Years Later
Caxton and CTP Publishers and Printers, listed on the Johannesburg Stock Exchange, acquires Amcor Flexibles South Africa for millions in cash. The acquisition will enable Caxton and CTP to expand their product range and geographic footprint in the flexible packaging market.

Caxton’s justification for the planned deal is to broaden its current portfolio in order to grow its footprint in the South African packaging market. The company has seen recent growth in this area. It expects the acquisition, along with other innovations, to contribute to a significant increase in turnover next financial year.

This move would entrench CTP’s foothold in the market, solidifying its position as a leading packaging provider. It will provide numerous benefits. It would result in higher sales and market share for Caxton. More options and a bigger selection of goods would be available to consumers.

Amcor Disinvestment
Disinvestment is the act of withdrawing investment from a particular area or sector. It can refer to the sale of assets, such as factories or shares in companies, or it can refer to the reduction of spending on activities such as research and development. Disinvestment usually occurs when an investor feels that there is a better opportunity elsewhere, or when the returns on investment in a particular area are no longer deemed to be sufficient. In some cases, disinvestment may also be a response to political instability or changes in government policy.

Samantha Gouy from Amcor Flexibles EMEA confirmed that the decision is a disinvestment as they are currently evaluating Amcor’s portfolio. Withdrawing investment from an area or sector can have positive and negative consequences.

It might cause job losses and a drop in economic activity. On the other hand, it can free up resources that are useful in reinvesting in more productive areas. Ultimately, whether or not disinvestment is a good thing depends on individual circumstances.

Due to the Unrest
Besides the impact of the unrest that happened, the Parliamentary Portfolio Committee on Trade and Industry discussed Amcor’s employment details. The report, dated August 6, 2021, said that Amcor’s factory employs more than 400 employees. The majority of these employees are working in KwaZulu-Natal, mainly from communities surrounding Pinetown. Other employees are working in smaller factories such as Cape Town and Gqeberha.

The report noted that the unrest had a significant impact on Amcor’s business, causing it to close its factories for several days and resulting in a loss of production. It is clear that the unrest has had a significant impact on businesses in South Africa, and Amcor is just one example of this. Through its report, the Parliamentary Portfolio Committee has shone a light on the need for continued peace and stability in any country.

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