Glass-packaging manufacturer Consol, which is being unbundled from industrial giant AVI, will be making its reappearance on the JSE Securities Exchange (JSE) on February 28 after an absence of seven years, it emerged on Friday.
With a total turnover of about R2,1-billion rand, Consol is South Africa’s largest glassmaker, claiming a substantial 75% market share of the local glass-container market. This far outweighs its closest competitor, Nampak, which has about a 20% market share.
The group also has a plastics division, which contributed about R220-million to total turnover for the year to the end of June 2004. The local alcoholic beverages industry, including Distell and SABMiller (SAB), are among Consol’s largest clients.
With wine exports under pressure from the strong rand, smaller wine players have sometimes voiced concern over Consol’s pricing power given the almost duopolistic nature of the glass market, although glass imports do help keep a check on local prices.
In November, the Competition Commission referred a complaint against Consol and Nampak to the Competition Tribunal for adjudication for alleged anti-competitive behaviour. This followed an investigation by the commission of a prior complaint relating to price-fixing between the two companies.
Parent AVI said on Friday that it plans to distribute its interest in Consol to its shareholders in the ratio of one Consol distribution share for one AVI ordinary share. The group will distribute 31,386-million Consol ordinary shares to shareholders recorded in the AVI shareholder register as on March 4, AVI said, and the shares will be listed on the JSE.
The JSE has already granted approval for Consol to be listed in the support-services sector of the JSE, with effect from February 28.
Consol MD Mike Arnold said at a presentation in December that he expects local demand for the group’s products to grow in line with the economy over the next few years, at between 3% and 5%. Other growth opportunities will come via expansion into the rest of Africa, as well as an anticipated continuing rise in wine exports.
AVI shareholders will vote on the proposed unbundling of Consol and a proposed AVI payment from share premium of 64 cents per AVI share at a meeting on February 7. There are also other conditions to be fulfilled before the unbundling can go ahead.
In its pre-listing statement issued on Friday, Consol said its client base includes South Africa’s premier food and beverage producers. Major Consol Glass clients are ABI, Appletiser, Ceres Fruit Juices, Coca-Cola, Diageo, Distell, KWV, Nestle, SAB, Tiger Brands and Unilever.
The major clients of Consol Plastics include Adcock Ingram, Danone-Clover, Dulux, National Brands, Parmalat and Plascon. — I-Net Bridge