Delta weighs capital lifeline for Nampak after US$25m TSL deal collapse

LIVINGSTONE MARUFU

Delta Corporation Limited, which holds a 22% stake in Nampak Zimbabwe, is planning a capital injection into the packaging manufacturer as part of efforts to stabilise and reposition the business following the dramatic collapse of a US$25 million takeover deal by Tobacco Sales Limited (TSL).

The move signals a potential turning point for Nampak, which has been battling operational headwinds and weakening volumes amid persistent power outages and intensifying competition in key segments.

Nampak has struggled to meet shareholder expectations, with overall volumes trending below prior year levels, largely due to frequent production stoppages arising from power cuts and increased competition.

Delta company secretary Faith Musinga confirmed that the aborted TSL transaction had shifted the focus toward internal recovery measures.

“The focus is now on business recovery supported by strategic capex to restore competitiveness and improve efficiency,” Musinga said.

The statement underscores the urgency of recapitalisation at Nampak, whose growth trajectory was expected to receive a major boost from TSL’s planned acquisition of a controlling 51.43% stake.

In September last year, TSL abruptly abandoned its proposed US$25m acquisition of the majority stake in Nampak Zimbabwe Limited, citing shifting market fundamentals and looming shareholder resistance that had rendered the transaction unattractive.

The deal had been formalised through a Share Sale Agreement (SSA) with Nampak Southern Africa Holdings Limited on March 25, 2025, and had already secured regulatory approval from the Competition and Tariff Commission of Zimbabwe.

Despite receiving the green light from regulators, TSL’s board ultimately concluded that the transaction could not proceed.

TSL chairman Antony Mandiwanza laid bare the rationale behind the withdrawal.

“The fundamentals existing at the time the company bidded have hugely shifted away from value creation for example, the market fragmentation changed, capex and working capital requirements are now more urgent than before.”

He added:

“The value for money at $25m no longer holds so the deal is now unattractive to shareholders.”

Following this assessment, TSL formally advised Nampak Southern Africa Holdings Limited that the shareholder approval condition precedent under the SSA would not be met. Both parties subsequently agreed to terminate the deal.

The collapse of the TSL–Nampak transaction highlights the complexities of executing mergers and acquisitions in Zimbabwe’s evolving corporate landscape.

While regulatory clearance is a critical milestone, analysts note that it is far from the final hurdle. Shareholder alignment has increasingly emerged as a decisive factor in determining whether high-value transactions succeed or fail.

For TSL, walking away from the deal was both a strategic setback and a calculated move to preserve investor confidence. By withdrawing before convening a potentially contentious extraordinary general meeting (EGM), the board avoided the risk of reputational damage and shareholder unrest.

As one of Zimbabwe’s leading packaging manufacturers, Nampak has been seeking fresh capital and strategic partnerships to modernise its operations and expand capacity. However, the deteriorating operating environment, characterised by energy instability and tighter competition, has amplified the urgency for investment.