Mondi to demerge S. African packaging arm

7th Apr 2011 07:51

Paper and packaging firm Mondi is to hive off its South African packaging business.Mondi will demerge Mondi Packaging South Africa (MPSA) as it believes MPSA's future growth plans, especially with regard to its rigid plastics business, are constrained by the Mondi Group's differing strategic focus."MPSA is unique within the group as no other part of Mondi produces rigid plastics or carton board and therefore the board felt that MPSA would be best placed to take advantage of the considerable opportunities available to it as an independent entity," explained David Hathorn, chief executive officer of Mondi.MPSA's shares will be listed n the Johannesburg Stock Exchange (JSE) under a new name.The parent company's shares are listed on both JSE (as Mondi Limited) and the London Stock Exchange (as Mondi plc). As part of the proposed demerger, Mondi Group intends to undertake a "matching action" by way of a share consolidation of Mondi Limited ordinary shares. So far as possible, the matching action will seek to ensure that the effect of demerging MPSA will have "an equivalent but not necessarily identical economic effect" on Mondi Limited and Mondi plc shareholders. The outcome of the proposed demerger may have a material effect on the price of Mondi Group's securities, the group warned. "Accordingly, shareholders are advised to exercise caution when dealing in their Mondi Group shares until a further announcement is made."---jh