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Paper-related companies appeared keen to give updates on Friday, notably a confirmation from Mondi that it is serious about a glue-up with the UK's DS Smith. In international news, Australia's automotive lobby group has seen another carmaker quit amid a controversy over criticism about emissions rules.
Mondi on Friday said it had reached terms on the acquisition of UK packaging group DS Smith for £5.1 billion (R122 billion) in a deal that would create one of the world's largest makers of packaging. The agreement, in principle, has an implied value of 373p a share. This 33% premium compared with DS Smith's price on 7 February, the day before the company said it had received an initial approach from Mondi. The companies have said the combination would generate cost savings as well as benefits from greater scale as the packaging industry consolidates. Mondi shareholders would own 54% and DS Smith shareholders the rest, while Mondi's chair Philip Yea, CEO Andrew King, and CFO Mike Powell would all retain their positions. The parties have also asked for regulatory approval of an extension on making a firm offer to 4 April. Mondi closed about 1.7% lower on the JSE, while in the UK, DS Smith had jumped almost 6%. - Bloomberg
Publishing and printing company Caxton reported on Friday its profit fell almost 31% to R280.2 million in its six months to end-December, when it grappled, as expected, with consumers battling inflation, low economic growth and load shedding. The review period was characterised by a decline in overall revenues and tightening of margins, which were offset by good cost control and an increase in net finance income. The group incurred a loss of R45.2 million on the sale of its entire shareholding in Novus Holdings, largely offset by growth in net finance income of R35.9 million (56.3%) as the group held substantially higher average cash balances. "Trading conditions are not expected to improve for the remainder of the financial year and there is a risk that these could deteriorate further," it said. "This trend is likely to continue until the economy can show some meaningful growth and interest rates decline, to give the consumer respite. The group will continue to manage costs closely and remains on the lookout for suitable acquisition opportunities to deploy our cash reserves." Caxton closed 1.7% lower but has still risen about 0.5% in the past twelve months.
