South African packaging company Nampak has entered into an agreement with Clements Nominees in terms of which Nampak will acquire the entire issued share capital of Nigeria-based beverage can manufacturing facility Alucan Packaging from investment holding company Alucan Investments for $301-million.

The acquisition will also see the group secur- ing the shareholder loans made by Clements.

Further, as an integral part of the arrange-ment, Nampak has been granted an option, valid for a period of ten years, to also acquire the entire issued share capital of a company engaged in rigid plastic packaging in Nigeria, if the beneficial owner elects to sell his interest.

Nampak will fund the acquisition through available cash resources and existing debt facilities.

Commenting on its motivation for the acqui-sition, Nampak states that beverage can manu-facturing is one of its core businesses and one in which it has a strategic competitive advan- tage. The acquisition supports its aim to grow its revenue footprint in Africa to 35%.

“We have been looking to invest in such a facility in Nigeria for some time and Alucan’s installed capacity, valued at $120-million, includes the preparation and civil engineering for a second line, which has the potential of adding a further 1.1-billion cans a year in this rapidly growing market,” the company notes.

Alucan Packaging manufactures beverage cans for the beer, malt and soft drink industry in Nigeria. It has been operating an eight-colour, two-piece single aluminium beverage can manufacturing line since March.

The manufacturing facility occupies 35 000 m2 on 8.4 ha of land, while its main factory occupies 32 000 m2 and has a current production capacity of 1.1-billion cans a year.

Nampak says the decision to acquire the company at a substantial premium to net asset value will enable the company to access the Nigerian market immediately and gain a first mover advantage in Africa’s second-largest economy.

“We evaluated the greenfield alternative but, based on our experience in setting up other plants on the continent, notably our can manufacturing plant in Angola and our cartons and labels business in Nigeria, this option was not favoured, as it was estimated that it would take us in the region of three to four years to be up and running at a cost of some $160-million.

In this scenario, early market advantage would have been lost,” the company said in a statement earlier this month.

Plastic packaging manufacture is also a core business for Nampak, and the option to acquire a large and established rigid plastic manufacturer in Nigeria will provide an opportunity to further grow the group’s revenue in the rest of Africa.

The acquisition remains subject to various conditions precedent, including approval by the Financial Surveillance Department of the South African Reserve Bank.