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MPACT’S share price rose to a year high of R27.51 a share on the JSE yesterday afternoon after the Competition Commission notified the company that Caxton and CTP Publishers and Printers want to increase its stake in the company from 32 percent to a possible controlling stake.
Mpact, the largest paper and plastics packaging business and recyclers in southern Africa with a market cap of more than R3.5 billion, received the letter on June 24 from the Competition Commission, advising it Caxton had notified the commission that it had taken a decision to increase its current shareholding in Mpact of approximately 32 percent, which would likely result in it acquiring control over Mpact in terms of the Competition Act.
Mpact’s share price gained more than 15 percent to a 52-week high of R27.51, valuing the company at more than R4 billion, up from Tuesday’s closing price of R23.79.
The share closed at R26. However, Caxton also advised the commission that it had not yet made a formal offer to the Mpact board of directors or to its shareholders.
“Caxton advised the commission that it will, in circumstances where it acquires an interest equal to or greater than 35 percent in the issued share capital of Mpact, be required to make a mandatory offer to shareholders, pursuant to the provisions of section 123 of the Companies Act,” the group said.
Caxton has also notified the commission it seeks to obtain merger approval in terms of the Competition Act in advance of triggering the mandatory offer in order to obtain regulatory certainty and to avoid any unnecessary delays in the implementation of the mandatory offer, in the event that it does result in an acquisition of control over Mpact by Caxton.
Caxton has also requested permission from the commission to file a separate notification of merger.
However, the commission has yet to determine whether Caxton will be permitted to file a separate merger notification.
Meanwhile, Mpact had informed its shareholders its board had not agreed to a joint merger notification with Caxton on the grounds that Caxton had not disclosed a proposed offer price or terms, and the board was unable to determine whether any such offer would be in the best interests of shareholders or the company.
“In the event that permission is granted by the commission for Caxton to file a separate merger notification, shareholders are further advised that, as the merger would be a large merger as defined in the Competition Act, and due to competition and public interest considerations, the process leading to a decision from the competition authorities may take many months,” Mpact said.
Mpact’s revenue for the period ending May 31, 2021, was R4.8bn, 16 percent higher than the comparative period, while underlying operating profit more than doubled to R240 million as underlying profit exceeded pre-pandemic comparatives in both the plastics and paper businesses.