Nampak has agreed to sell its Zimbabwean unit to TSL for $25 million, contingent on suspensive conditions. The transaction is part of Nampak’s asset disposal strategy amidst challenging economic conditions in Zimbabwe, including currency instability. TSL will make a mandatory offer to remaining shareholders while Nampak focuses on cost containment to protect profitability against a backdrop of declining revenues and market disruptions.
Nampak, a South African packaging manufacturer, has announced the sale of its Zimbabwe subsidiary, Nampak Zimbabwe, to Harare-based logistics company TSL for $25 million. The sale is contingent upon suspensive conditions and is part of Nampak’s asset disposal strategy. Shareholders will be notified about the full terms of the transaction in the coming weeks.
In adherence to the Companies and Other Business Entities Act and the Zimbabwe Stock Exchange Listings Rules, TSL is obliged to extend an offer to Nampak Zimbabwe’s remaining shareholders. TSL has indicated it has the capacity to fund this mandatory offer, potentially through cash or a share swap.
Amid challenging economic conditions, including recent currency policy changes that complicate financial reporting for businesses, Nampak Zimbabwe is enacting cost-containment strategies. Managing Director John van Gend noted the complexities of the Zimbabwean operating environment affected by policy shifts and currency instability, making profitability a significant concern.
Nampak Zimbabwe faced reduced demand for packaging materials due to increased competition and supply chain disruptions resulting from civil unrest in Mozambique. The company experienced a 23% decline in revenue in US dollar terms and a 56% drop in trading profit, attributing these losses to decreased demand across various business units.
The fluctuations in exchange rates, particularly following local currency depreciation, have compounded challenges, impacting the wholesale and retail sectors significantly. These factors pose further risks to the sustainability of businesses operating in the region, raising concerns about potential company closures and employee layoffs.
In conclusion, Nampak’s divestiture of its Zimbabwe operations is a strategic response to a challenging economic landscape characterized by severe currency instability and heightened competition. The forthcoming mandatory offer by TSL and Nampak’s focus on cost-containment and profitability underscore the pressing need to navigate these turbulent conditions. As the economic environment evolves, the sustainability of operations and the overall market stability remains uncertain.
Original Source: www.newzimbabwe.com
