Mpact, the JSE-listed packaging group, is selling its Versapak division to Greenpath Recycling, which is an owned subsidiary of Sinica Manufacturing, as part of a broader portfolio optimisation strategy.
Versapak’s net asset value was R239.28 million as at December 31, 2023, and the purchase price would be adjusted based on the amount of stock on hand, according to a JSE regulatory notice yesterday.
The deal excludes all cash, debtors and creditors of the Versapak business and two properties from which the business operates, which the purchaser aims to lease.
Versapak produces styrene and PET trays and punnets, as well as vinyl cling film from two plants – in Paarl, Western Cape, and Roodekop, Gauteng. The lease agreements relate to the two properties where the business is operated.
Sinica makes and supplies plastic packaging products, including polystyrene meal boxes and trays, vinyl film and polyamide ethylene vinyl alcohol vacuum bags. It’s products are manufactured at a facility in Benoni.
Mpact decided to sell Versapak after a strategic review in 2021, as part of a portfolio optimisation plan, as Versapak’s products were not fully aligned with Mpact’s strategy.
Mpact has since been reporting the business as held-for-sale. Versapak’s pre-tax profit attributable to the assets being sold amounted to R175.69m for the year ended December 31, 2023. The pre-tax profit included a R74m fair value gain recognised on the remeasurement of plant and equipment.
Mpact has said it would release its financial results, for the six months to June 30, on Monday. It has warned that headline earnings per share of continuing operations were expected to decline by between 37.8% and 32.5%.
This was because the group operating profit margin decreased from the high levels achieved in the six months ended June 30, 2023, when there had been a strong recovery in Paper margins following selling price increases at the end of 2022.
In addition, containerboard and cartonboard demand remained subdued and selling prices were lower than the comparable prior year period.
The group’s Plastics business increased revenue across all three divisions, primarily due to higher sales volumes in the Bins and Crates and FMCG (fast moving consumer goods) businesses, and operating profit for the business was expected to be in line with the prior period with an increase in Bins and Crates on the back of recent investments offset by decreases in the other two businesses.
Group earnings before interest, tax depreciation and amortisation (Ebitda) were expected to decrease by approximately 8% from R797m in the prior year, largely due to the under-recovery of fixed costs as well as higher depreciation from major projects.
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