Home » Industry » Delta Agrees to Consolidate Businesses

Delta Beverages has accepted Nampak South Africa’s proposal to consolidate both companies’ shareholding in MegaPak Zimbabwe, a local plastic packaging company to form one entity, a company official said. Nampak holds a 49 percent stake in MegaPak Zimbabwe with Delta having the remaining controlling stake of 51 percent.

Nampak also owns local metal packaging company CarnaudMetalbox and has 38,91 percent interest in Hunyani Holdings.

Under the new consolidated structure MegaPak and Metal Box will be divisions of Hunyani but the entity will change its name to Nampak Zimbabwe Limited where Delta will swap its 51 percent shareholding in MegaPak to 22,6 percent in the new Nampak Zimbabwe.

Speaking at the company’s annual general meeting yesterday Delta chief executive Mr Pearson Gowero said the company’s board of directors has approved the idea to consolidate the business.

“We are considering a proposal from Nampak and they have been expressing interest to consolidate their investments in Zimbabwe and form one entity.

“The Board of directors have approved that we participate in the consolidation and Delta is therefore swapping its 51 percent shareholding in MegaPak to 24 percent in the new entity Nampak Zimbabwe and would be further diluted to 22,6 percent as Nampak has indicated that they would want to inject more capital into the business,” said Mr Gowero.

“On our part we have indicated that we would not want to make further investments into the business and as part of the agreement we will continue to get packaging supplies from the new entity.”

Nampak is following a two-pronged strategy to grow its business firstly through unlocking further value from the base business of packaging by actively managing its portfolio and secondly by accelerating growth in Africa.

Meanwhile, Mr Gowero said Delta continues to thrive despite the prevailing tight liquidity situation where disposable income is subdued.

He said the prevailing macro-economic environment has been characterised by deflation with consumers seeking value and focusing on basic necessities.

“In the absence of deliberate strategic interventions by all stakeholders, the economy is likely to continue on a difficult path. The company will continue to focus on value creation by investing in its brands, plant capacity and skills development,” said Mr Gowero.

Despite some improvements in agricultural output, cotton, tobacco and cereals low market for cash crops, however, left most farmers without much capital at their disposal.

Mr Gowero said the depreciation of the South African Rand is also posing a threat to the operations of local companies as the situation continue to encourage parallel imports exacerbating the influx of imported products into the country.

Depressed demand for the lager beer indicates down trading with consumers opting for cheaper alternatives.

g volume growth of Chibuku recorded by the company was spurred by the increase of production capacity for Chibuku super.

Mr Gowero said the downturn in soft drinks reflected soft aggregate demand with the shift going towards PET and cans.

“Maheu growth category expanded into dairy flavoured beverages for instance Super Sip brand. A new production line will be commissioned in the first half of the new financial year to eliminate the capacity constrains experienced in the period under review,” he said.

Source : The Herald