Remgro plans to sell Nampak stake

South African investment firm Remgro said on Wednesday it will sell its entire stake in packaging manufacturer Nampak, a deal that could be worth about $192-million.

Shares of Nampak tumbled more than 6% on the news.

Remgro, which has stakes in financial services, media and healthcare companies, said it wants to sell its 11,8% holding in Nampak after deciding it was a non-core asset.

Remgro said in a statement it aims to sell its 78,1-million shares in the packaging company through an accelerated bookbuild to institutional investors.

Rand Merchant Bank and Morgan Stanley have been been appointed joint bookrunners for the placement, Remgro said.

Shares of Nampak fell 6% to R18,10 as of 8.53am GMT, valuing Remgro’s stake at R1,4-billion.

One analyst said Remgro likely wanted to cash out of its stake after a strong performance in Nampak’s share price so far this year.

“It’s probably profit-taking from Remgro, given the fact that Nampak’s share price has increased by 20% year-to-date,” said one analyst, who declined to be identified because he is not allowed to speak to the media.

Nampak said last month it expects full-year earnings to rise by as much as 90%, helped by an improvement in its corrugated division and its UK cartons business.

Nampak, Africa’s biggest packaging group, supplies Coca-Cola, SABMiller and McDonald’s in South Africa.

Consumer spending still remains weak in Africa’s largest economy, even after a recession ended last year. Nampak’s chief executive has said he wants to make the company “more focused and smaller”.

Shares of the company are still up 19,3% so far this year, buoyed by expectations the company’s turnaround strategy was progressing.

Remgro said the proceeds from the sale would be used to invest in companies closer to its investment strategy or in which it would have a higher degree of influence. – Reuters

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