CAPE TOWN – Print and media group Caxton & CTP Publishers and Printers announced on Thursday that it has received approval from the Competition Tribunal to acquire the operating division of Nampak Cartons and Labels in South Africa from Nampak.
The deal will add significant volume to Caxton’s packaging business, which has become increasingly important for the group. Revenues from its packaging divisions have grown from R677 million in 2012 to R764 million in 2013 and R927 million in 2014.
The company said in an announcement that it expects the Nampak deal to help boost packaging revenues to over R2 billion in the coming year.
“We’ve been in packaging for a while and when this opportunity came around we saw it as a chance to add more bulk overall to the group, but also in a market that can add significant value going forward,” says executive director at Caxton Tim Holden. “It is also an opportunity to diversify the group further, with our packaging divisions becoming around 30% of turnover.”
Caxton operates in niche packaging segments, such as manufacturing cigarette cartons and folding cartons for the food, beverage and confectionery industries. It also produces wet glued paper-based adhesive labels for beer bottles and flexible labeling.
Holden said that the acquisition of Nampak Cartons and Labels does not signal a shift away from its print media business. It is rather looking to take advantage of an area that they believe is a growth market. “Print media has been under pressure with falling circulations, although Caxton is well-placed in this market with its predominantly free local newspaper offerings,” said Holden.
“It’s not as if we see the print media as something risky that we have to diversify,” Holden says. “This was just an opportunity to take a much bigger part of a market that we believe can contribute more significantly to the group.”
Although margins in the packaging industry are under pressure, Caxton hopes the acquisition will align well with its existing businesses to add to its competitiveness.
“For anything in this environment that’s related to consumer goods you have to be competitive,” Holden says. “But because we already have the same types of operations within the group, we believe we can extract synergies.”
Holden adds that while Caxton may not primarily be known for its packaging businesses, this is in area that they will foreground more as it becomes a bigger part of the group.
“Packaging is something that will continue to contribute to growth in turnover and profitability, and it will be an area of increasing focus,” he says.