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Acquisition by Nampak of Alucan Investments and Alucan Packaging
Nampak Limited
(Incorporated in the Republic of South Africa)
Registration number: 1968/008070/06
Share code: NPK
ISIN: ZAE000071676
(“Nampak” or “the Company” or “the Group”)
- ACQUISITION BY NAMPAK OF ALUCAN INVESTMENTS AND ALUCAN
PACKAGING
- OPTION TO ACQUIRE ANOTHER NIGERIAN COMPANY IN THE RELATED
FIELD OF RIGID PLASTIC MANUFACTURE
- UPDATE ON ANGOLA
1. Introduction
Nampak shareholders are advised that Nampak, through its
wholly owned subsidiary, Nampak Holdings (UK) Limited,
has entered into an agreement with Clements Nominees Ltd
("CNL"), in terms of which Nampak will acquire the entire
issued share capital of Alucan Investments Limited
(BVI)("AIL") as well as all the shareholder loans made by
CNL as at the effective date.
AIL is the beneficial owner of the entire issued share
capital of Alucan Packaging Limited ("APL") including the
shareholder loans.
As an integral part of the transaction Nampak has been
granted an option, valid for a period of ten 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 (the
"Option").
2. Background Information on AIL AND APL
AIL is an investment holding company incorporated in the
British Virgin Islands. Its sole investment is its 100%
shareholding in APL.
APL is a beverage can manufacturing facility located in
Agbara, Nigeria. APL was formed to establish an operation
to run an 8 colour, 2-piece single aluminium beverage can
manufacturing line. The company manufactures beverage
cans for the beer, malt and soft drink industry in
Nigeria and commenced operations in late March 2013.
APL’s manufacturing facility occupies 35,000m2, on 8.4 ha
of land, while its main factory occupies 32,000m2 and has
a current production capacity of 1.1bn cans per annum.
The installed capacity is valued at US$120m and includes
the preparation and civil engineering for a second line
with the potential of adding a further 1.1bn cans per
annum in this rapidly growing market.
3. Rationale for the Acquisition and the Option
Beverage can manufacturing is one of Nampak’s core
businesses where the Group believes it has a strategic
competitive advantage. Furthermore, it is the Group’s
communicated strategy to grow its revenue footprint in
Africa to 35% by 2015. As a result, Nampak has been
looking to invest in a beverage can manufacturing
facility in Nigeria, Africa’s second largest economy. The
decision to acquire AIl/APL at a substantial premium to
net asset value is to access the Nigerian market
immediately and to gain first mover advantage in Africa’s
second largest economy. Nampak evaluated the greenfields
alternative but, based on our experience in setting up
other plants on the continent, notably our can
manufacturing plant in Angola and our Cartons and Labels
business in Nigeria, this option was not favoured as it
was estimated that it would take Nampak in the region of
three to four years to be up and running at a cost of
approximately US$160m. In this scenario, early market
advantage would have been lost.
Plastic packaging manufacture is also a core business for
Nampak and the Option to acquire a large and established
rigid plastic manufacturer in Nigeria will provide an
opportunity to further grow Nampak’s revenue in the rest
of Africa.
4. Purchase Consideration
The consideration payable for the Acquisition and the
Option is US$301m, which Nampak will fund through
available cash resources and existing debt facilities.
5. Conditions Precedent
The Acquisition is subject to various conditions
precedent, inter alia, approval in writing being granted
to Nampak by the Financial Surveillance Department of the
South African Reserve Bank.
6. Representations and warranties
The sale and purchase agreement includes representations
and warranties usual for a transaction of this nature.
7. Pro Forma Financial Effects
The pro forma financial effects of the Acquisition are
presented for illustrative purposes only and because of
their nature may not give a fair reflection of the
Company’s financial position, changes in equity, results
of operations or cash flows nor of the effect on future
earnings after the Acquisition.
Set out below are the pro forma financial effects of the
Acquisition, based on the unaudited interim results for
the period ended 31 March 2013. APL commenced operations
in March 2013 so the pro forma financial information
presented below, only reflects the costs incurred by
Nampak in undertaking the due diligence of AIL & APL as
well as the implied cost of borrowings and related
taxation effect for the period 1 October 2012 to 31 March
2013. The directors of Nampak are responsible for the
preparation of the pro forma financial information. The
pro forma financial effects are prepared in terms of JSE
Listings Requirements using accounting policies of Nampak
as at 31 March 2013.
Unaudited Pro Forma Change
before after (%)
Acquisition Acquisition
(cents) (cents)
Basic earnings 134.8 126.5 -6.1
per share
Headline 108.8 100.5 -7.6
earnings per
share
Net asset value 1,136.8 1,134.2 -0.2
per share
Net tangible 1,000.4 709.6 -29.1
asset value per
share
Notes:
1. The figures in the “Unaudited before Acquisition” are
based on the unaudited results of Nampak for the six
months ended 31 March 2013.
2. The basic earnings per share and headline earnings per
share figures in the “Pro Forma after Acquisition”
column have been calculated on the basis that the
Acquisition was effected on 1 October 2012. The impact
on net profit for the six months ended 31 March 2013
was a cost of R49 million. This cost relates to
interest and acquisition related costs that would be
incurred if the business had been acquired on 1 October
2012. There is no further effect on net profit for the
six months ended 31 March 2013 as the business only
commenced trading in late March 2013.
3. The net asset value per share and net tangible asset
value per share figures in the “Pro forma after
Acquisition” column have been calculated on the basis
that the Acquisition was effected on 31 March 2013. Net
asset value per share and net tangible asset value have
been adjusted to include the pro forma consolidated net
assets attributable to APL as at 31 March 2013 of R1.2
billion and the goodwill arising on the Acquisition of
R1.7 billion.
4. The taxation rate applicable is assumed to be 23.5%.
5. The basic earnings per share and basic headline
earnings per share figures are calculated based on
weighted average number of ordinary shares in issue of
593 001 184 at 31 March 2013.
6. The net asset value per share and net tangible asset
value per share have been calculated based on 593 186
505 ordinary shares in issue at 31 March 2013.
7. Once-off transaction costs of R15m have been accounted
for in the pro formas.
8. The interest and tax adjustments are of a continuing
nature.
9. There are no post balance sheet events which need to be
taken into account in the pro forma financial effects.
8. Effective Date of the Acquisition
Subject to fulfilment of the conditions precedent, Nampak
expects the Acquisition to close in the first half of the
2014 financial year.
9. Classification of the Acquisition
The Acquisition is classified as a Category 2 transaction
in terms of the Listings Requirements of the JSE Limited.
10. Update on Angola
Further to the press speculation, Nampak confirms that it
is evaluating the addition of a second beverage can line
in Angola due to current capacity constraints in the
country. Further details will be provided in due course.
Johannesburg
18 November 2013
Sponsor: UBS (South Africa) (Pty) Ltd
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