Nampak is selling its Zimbabwe unit to TSL for $25 million, contingent on suspensive conditions. This aligns with Nampak’s asset disposal strategy, and TSL will offer remaining shareholders compliance with regulations. Nampak Zimbabwe faces challenges from economic instability and will focus on cost containment to sustain operations, amidst decreased revenues and supply chain disruptions.
Nampak has initiated the sale of its Zimbabwean unit to TSL, a logistics and processing firm in Harare. This transaction is contingent upon several suspensive conditions, as stated by Nampak Zimbabwe. The sale involves a 51.43% shareholding and a purchase consideration valued at $25 million, with an announcement on completion expected shortly.
Under the Companies and Other Business Entities Act and Zimbabwe Stock Exchange Listings Rules, TSL must extend an offer to remaining Nampak Zimbabwe shareholders. TSL confirmed its readiness to undertake this mandatory offer through a cash settlement or share swap involving its own shares.
The sale aligns with Nampak’s asset disposal strategy, while Nampak Zimbabwe focuses on cost-containment measures due to a challenging operating environment. The current landscape in Zimbabwe is marked by policy changes and currency instability, further complicating the climate for businesses.
John van Gend, managing director of Nampak Zimbabwe, highlighted the complexities faced by companies, particularly with recent currency policy changes. Although Nampak switched to US dollar financial reporting, the Reserve Bank mandated all local companies to report in the local currency. Van Gend called for decisive government actions to mitigate rising risks of closures and layoffs.
To address the economic downturn, Nampak Zimbabwe is implementing cost-containment strategies aimed at protecting margins and driving profitability. The last quarter showed decreased demand for packaging materials due to heightened competition and disrupted supply chains caused by civil unrest in Mozambique following election disputes.
The company encountered supply chain delays impacting deliveries during peak seasons, reflecting the broader economic challenges in Zimbabwe. The retail sector has faced considerable branch closures, hindering businesses’ sustainability. Nampak Zimbabwe reported a 23% revenue decline in US Dollar terms and a significant 56% drop in trading profit, attributed to reduced demand across its operations amidst unstable exchange rates.
Nampak Zimbabwe’s sale to TSL highlights strategic shifts amid economic challenges in Zimbabwe, with attention on cost management due to policy instability and currency issues. The company’s efforts to navigate these obstacles are critical as they face dwindling revenues and intense competition, while future government actions may influence operational sustainability.
Original Source: www.newzimbabwe.com
