Mondi to Demerge MPSA Packaging Group
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Mondi Group, South Africa, this week announced plans to separate its interest in Mondi Packaging South Africa (MPSA) via a demerger, whereby all of the ordinary shares in MPSA held by Mondi Limited will be distributed to the Mondi Limited ordinary shareholders. MPSA would be listed under a new name on the securities exchange operated by the JSE Limited.
MPSA's future growth plans, particularly with respect to its rigid plastics business, are constrained by the Mondi Group's differing strategic focus, Mondi notes. The demerger endorses MPSA's own strategy and provides shareholders with a clear benefit as both businesses would be able to take better advantage of their respective growth opportunities.
According to David Hathorn, CEO of Mondi Group, "this is the right time to demerge MPSA, for both Mondi Group and MPSA. While Mondi Group has been a very supportive owner, this move will give MPSA the flexibility it needs to develop its core growth areas. MPSA is unique within the Group as no other part of Mondi produces rigid plastics or cartonboard. Therefore the board felt that MPSA would be best placed to take advantage of the considerable opportunities available to it as an independent entity."
Currently, Mondi owns 70% of MPSA, the Shanduka Group owns 25%, and Mondi Employee Investment Co. (a Mondi ESOP) owns 5%. The shareholders have agreed to a recapitalization of MPSA ahead of its listing. The recapitalization would result in Mondi's equity interest in the business increasing to around 90%. Shanduka Group would reduce its interest in MPSA to around 10% just before the demerger and has committed to stay invested in MPSA for at least 180 days following its listing.
Mondi is an international paper and packaging group, with production operations across 31 countries. The Group's key operations are located in central Europe, Russia, and South Africa . At the end of 2010, Mondi employed 29,000 people.
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