The packaging company also have a 10-year option to purchase a related plastic packaging company in Nigeria. The Alucan investment deal is part of Nampak’s ongoing expansion strategy to boost sales from outside of South Africa.
“It’s a new line that has just been installed in Nigeria. It’s one of the facilities making beverage cans in (the country). We are already major operators there, we have two factories there, one in Lagos, a metal business and a carton business up in Ibadan,” Andrew Marshall, CEO of Nampak told CNBC Africa.
As the company is the biggest beverage can producer in South Africa and all over Africa, Marshall believes that this was an opportunity to grow in other markets.
“We are in the market, we are well established there and it’s just about expanding into beverage cans,” he said.
Alucan on the other hand, is a brand new family owned business which hasn’t been commissioned yet that is looking to Nampak to buy and commission it properly in January or February when they take over. Despite the challenges that many businesses coming into Nigeria face, Marshall is confident about this investment.
“We have been there for quite a long time, it’s becoming an increasing proportion of our profits. The volumes of growth is fantastic and our margins are better so for us, it’s not a new market, it’s simply a new product that we are entering in this market.”
While the purchase is only the first part of the deal, the factory is being configured to allow another line which is also expected to be added to their Angolan factory as the first one has run out of capacity.
“We are producing about 80 million cans a month in Angola and maybe a year or two ago, it was just 20 million cans. So you can see the growth and obviously, we are hoping the same would happen in Nigeria,” he added.
According to Marshall, operating in Nigeria has been relatively easy for the company because growing the business there is no longer a political issue since they don’t have to deal with the government as the decisions they take are purely commercial.