Caxton poised to acquire a controlling stake in package maker Mpact

• The Competition Commission has notified Mpact that Caxton decided to increase its 32% stake in the packaging company.
• Caxton has not made a formal offer to the packaging company’s board yet.
  
• If the acquisition is approved, then the publishing group could assume control of the packaging company.

Caxton and CTP publishers and printers may soon add packaging company Mpact to its list of businesses.

In market update on Wednesday, Mpact said it received a letter from the Competition Commission, notifying it that Caxton has decided to increase its 32% sake in the packaging company.

Caxton has not made a formal offer to the packaging company’s board yet. But if the acquisition is approved, then the publishing group will assume control of the packaging company.

The 41-year-old company is a well-known publisher of regional community newspapers and 13 magazines but it also provides packaging, stationery manufacturing, book printing and commercial printing services.

Mpact said Caxton had also requested the commission’s permission to file a notification of merger, something the commission hasn’t decided on yet.

"Shareholders are hereby notified that the board has not agreed to a joint merger notification with Caxton on the grounds that Caxton has, amongst other things, not disclosed a proposed offer price or terms," said Mpact.

• READ | Mpact moves to protect operations from blackouts after R91m revenue loss
  

And since it does not have all the information about the potential deal, the package maker said the board couldn’t determine if the offer is in the best interest of the company and it will provide further updates about the possible offer.

Despite the lack of clarity on the potential transaction, Mpact’s share price surged more than 9% by market close, a decline from the 15% high it enjoyed after the company released its statement on Wednesday afternoon.

Zaid Paruk, a portfolio manager and analyst at Aeon Investment Management, said: "The potential buyout offer vindicates our long-standing belief in the company that value exists."

Paruk added that he believed the company, which is currently trading at R26 per share, could trade at a much higher value, surpassing the R51 it traded at in 2016. He also said the company had a lot of value due to its good credentials, local market reach, and Environmental, Social and Corporate Governance projects it undertakes such as recycling, and creating employment, particularly in impoverished communities. 

But Paruk said a cash offer and not a share swap would be the best move for the company to make. 

"We don’t think there’s much in synergy that exists between the companies. We know the management team of Mpact, we are not so confident about Caxton," he said. 

Aeon Investment Management holds shares in Mpact.