TSL snaps up Nampak’s 51.43% shares
….deal awaits shareholders’ approval

CLOUDINE MATOLA
Tobacco Sales Limited (TSL), a publicly traded agro-business firm and Nampak Southern Africa Holdings Limited, have struck a deal wherein TSL would pay US$25m to acquire a 51.43% stake in Nampak Zimbabwe, Business Times can report.
This was confirmed by TSL company secretary Fadzayi Pedzisayi.
According to her, the two companies are now engaged to complete the deal.
“…the Company has made an offer for the acquisition of 51.43% shareholding in Nampak Zimbabwe Limited to Nampak Southern Africa Holdings Limited, which offer has since been accepted. The offer is for a purchase consideration of US$25m. The company and Nampak SAHL are now engaged in processes to finalise and execute the sale and purchase Agreement,” Pedzisayi said.
Furthermore, the acquisition will need shareholders’ approval, which will be requested at an extraordinary general meeting, according to Pedzisayi.
Commenting on the deal, Securities firm, FBC Securities, said the transaction was expensive since TSL is paying a significant premium over market value and shareholders may face value dilution and reduced financial flexibility since the deal depends on strong operational synergies.
“TSL is effectively valuing Nampak Zimbabwe at US$48.61m, which is more than double its current market cap based on the unofficial rate (US$22m) and significantly higher than its market cap at the official rate (US$30m).
“TSL appears to be paying a significant premium over the current market value of Nampak Zimbabwe. This suggests that TSL is either highly confident in Nampak Zimbabwe’s future prospects or is overpaying for the stake.
“Paying such a premium may raise concerns for TSL shareholders, particularly if the acquisition does not deliver the expected synergies or if the market capitalization of Nampak does not rise to justify the valuation. If TSL can realize strong strategic synergies with Nampak Zimbabwe (for example ,combining their operations in packaging, distribution, or logistics), the deal might make sense.
“However, if there is no clear strategic benefit, paying a substantial premium could hurt TSL shareholders by diluting their value or impacting the company’s future financial flexibility,” FBC Securities said.
FBC also highlighted that the deal has both opportunities and risks which include increasing Nampak stock value, investor confidence, if the deal is completed under less favourable conditions, Nampak’s shares might not rise and there will be potential overvaluation by TSL.
“Since TSL is valuing Nampak Zimbabwe at US$48.61m, well above the current market capitalization (US$22m unofficially), this could indicate that Nampak shares are currently undervalued. If the deal is finalized at this higher valuation, Nampak’s stock price may rise to reflect the value implied by the acquisition, providing potential gains for shareholders who buy shares at current prices.
“A large-scale acquisition like this may increase investor confidence in Nampak Zimbabwe, as TSL’s investment could signal belief in the company’s long-term growth prospects.
“The deal is still under negotiation, and there is always the risk that the terms could change, or the deal could fall through. If the deal is not finalised, or if it is completed under less favourable terms, the market price of Nampak shares might not rise to the expected levels, which could negatively affect investors who bought shares in anticipation of the deal. If TSL’s valuation of Nampak Zimbabwe is overly optimistic, there may not be enough upside for existing shareholders to justify buying the shares now,” FBC said.