Africa’s biggest packaging group Nampak Ltd. leaves Nigeria

Debt-heavy South African packaging company, Nampak Ltd., says it has agreed to sell its Nigerian can-making unit to Alucan Investment for $68.5 million (N103.8 billion).

The sale of Bevcan, Nigeria’s second-largest manufacture of beverage cans, is part of Nampak’s effort to raise 2.7 billion South African Rand ($147.8 million) to pay its debt.

Nampak, Africa’s biggest packaging group, acquired Bevcan Nigeria in 2014 for $180.6 million, suggesting the company has recorded a $109.5 million loss on sale of the asset.

But with Bevcan having a book value of $69.4 million at September 2023, investors responded positively, sending Nampak’s shares up 15% on the Johannesburg Stock Market this week.

Alucan Investment is a private limited company incorporated in Singapore. It is wholly owned by the Evergreen Trust, according to Daily Investor.

Harsh economy

Nampak Ltd. is amongst the latest companies to exit Nigeria where harsh macroeconomic conditions have forced many firms to either close or leave.

The company said in its financial statement that following the removal of fuel subsidies and devaluation of the naira, it recorded $54.7 million loss in Nigerian forex losses in 2023 and an impairment loss of $84.8 million on Bevcan Nigeria.

Previous deal

The deal to sell Bevcan Nigeria comes after Nampak closed its metal business in Nigeria and sold its property, equipment and machinery to Twinings Ovaltine Nigeria Limited for N7.5 billion in August.

Nampak said it made a decision to close its Nigeria Metals business from July 31, 2023 “due primarily to subdued demand for metal can products manufactured by this operation.”

The unit contributed only 1.47% to Nampak’s revenue, it said.

In 2019, the firm entered into an agreement with AR Packaging Group AB, a Swedish cigarette pack maker, for the disposal of its wholly-owned subsidiary Nampak Cartons Nigeria.

In December, Nampak said it planned to raise $147.8 million through asset disposals over 18 months to repay its debt.

Its asset disposal plan in Nigeria, first announced last August, was subject to approval by the Federal Competition and Consumer Protection Commission.