Competition authorities have finally given printing and publishing group Caxton the nod to buy packaging specialist Amcor’s operations and properties in Cape Town and Gqeberha for R90m, as part of its strategy to grow its business and gain market share in that sector.
The deal, which was first announced in April, got unconditional approval from regulators at the end of July and was implemented on Monday.
Caxton has been restructuring in the face of falling newspaper and magazine sales, but has returned to annual profit after cost-cutting. It said earlier that the deal is part of its “strategic intent to entrench its footprint in the SA packaging landscape by expanding on its existing packaging product portfolio”.
The group generates about 55% of its revenue through publishing, printing and distribution, with the rest coming from stationery and packaging. The former division grew revenue by 14%, with stationery and packaging growing revenue by 10%, in its half-year to end-December.
Caxton, valued at R3.18bn on the JSE, said in a statement on Wednesday that a preliminary review of the acquisition confirms its initial assessment that the transaction “will complement Caxton’s existing businesses and will be value accretive”.
“Operational integration is already under way, with pleasing prospects,” it added.
Amcor’s operation in Cape Town produces bag-in-a-box bladders, which Caxton says is “a complementary and natural fit” with its cartons operation in Epping that produces bag-in-a-box cartons for the wine industry, a sector that’s showing increasing growth. Amcor’s Cape Town factory “is almost adjacent” to Caxton’s flexibles business in Ndabeni, the company said.
Amcor’s business in Gqeberha extrudes film, slits and embosses liners for the automotive tyre industry and has produced “consistent results for the past few years”.
Caxton has seen an increase in demand for packaging, resulting in it gaining market share, amid demand in SA’s quick-service restaurant industry, where home delivery options have proven successful.
The supply of folding cartons to the frozen food and fast-moving consumer goods market showed similar demand as in the prior year, as these markets were not affected by the pandemic restrictions.
The share price was up 1.85% to R8.79.
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