Packaging manufacturer Mpact has agreed to sell its Versapak business to Greenpath Recycling, a unit of Sinica Manufacturing, for R267.7m.
Greenpath will acquire the business as a going concern, and the employees will transfer to the buyer.
The purchase price will be adjusted based on the amount of stock on hand and the value of certain employee liabilities.
The disposal excludes all cash, debtors and creditors of the business and the two properties from which the business operates. The parties have entered into two separate lease agreements in terms of which the buyer will lease these properties.
Versapak operates a business comprising the production of styrene and PET trays and punnets, as well as vinyl cling film. The business is operated from two plants in Paarl, Western Cape, and Roodekop, Gauteng.
Sinica is a manufacturer and supplier of a range of plastic packaging products, including polystyrene meal boxes and trays, vinyl film, and polyamide ethylene vinyl alcohol vacuum bags. Sinica’s products are manufactured at a facility located in Benoni.
The disposal is in line with Mpact’s portfolio optimisation plan and followed a strategic review in 2021.
The rationale for the decision to sell was that the products of Versapak are not fully aligned with Mpact’s strategy. A process to sell the business then commenced with a number of interested parties invited to participate in the sale process.
The transaction is subject to approval by SA’s competition authorities. Mpact expects the effective closing date of the disposal to be in the fourth quarter 2024.
Mpact said in July that it expects earnings will fall by a third when it reports interim results in August, as its paper business grappled with subdued demand and lower selling prices.
Southern Africa’s largest paper and plastics packaging business and recycler said headline earnings per share (HEPS) for its total operations were expected to fall 28.6%-33.8% to 140c-151c for the six months to end-June. HEPS from continuing operations were expected to slip 32.5%-37.8% to 117c-127c.
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