The combination of South Africa's two leading packaging companies, Nampak Ltd. of Johannesburg and Malbak Ltd. of Cape Town, is creating a major regional company with 136 plants and 19,000 employees in Africa. But the new Nampak also is a significant force in the European packaging market.
Shareholders of Nampak and Malbak approved the 1.98 billion rand ($196 million) deal at meetings in July and August. The deal officially was completed Aug. 26.
Nampak is paying a combination of cash and stock for Malbak. The deal does not include Malbak's rigid plastics packaging business, which was sold in March to a consortium headed by the unit's former chief executive officer.
However, the deal does include significant plastics and paperboard operations. Here is a snapshot:
* The new Nampak operates in 18 countries and has annual sales of about $1.78 billion. The bulk of the operations - 112 plants and 14,462 employees - are in South Africa, but the company has plants in 11 other African nations.
* In Europe, the company has 40 plants and 3,930 employees. The majority - 27 plants and 2,879 employees - are in the United Kingdom.
* Plastics operations include closures, PET bottles and preforms, high density polyethylene bottles, polypropylene bottles, retail bags, stretch wrap, shrink wrap, cast film for diaper liners, and film for cereal pouches.
* Nonplastics operations include beverage, aerosol and food cans; metal closures; glass bottles; paper cartons and tubes; and a variety of paper and foil flexible packaging.
``This represents a major step in our strategy to redress the imbalance of power currently in the hands of the packaging specifiers, which threatens the long-term stability of our industry,'' John Monks, Malbak's chief operating officer, said in a news release.
None of Nampak and Malbak's competitors opposed the merger, but a handful of customers did.
Analysts expect Nampak executives to have their eye on international expansion opportunities, since the two former competitors already have a huge share of the South African market.
Meanwhile, the former Malbak rigid plastics operations now are owned by Douglas de Jager and his brother Geoffrey. The pair bought the plants for 256.5 million rand ($25 million).
``Rigids operates in a difficult market, characterized by low selling prices, advances in technology and changes in consumer packaging trends, which have resulted in poor financial returns for this division,'' Malbak reported in February.
``We found that too much investment was required for rigids, for us to comfortably finance without jeopardizing Malbak's other businesses. There would not be sufficient return on the investment,'' Monks said.