Business

Services group Bidvest has announced that it is reconsidering its bid to buy a quarter of Nampak after the South African group said the bid undervalued the shares.

Bidvest announced today (29 September) that it would have to evaluate its offer and "decide whether to proceed with the pro-rata offer at the price, or at all".

On Friday Nampak issued a trading statement that claimed that Bidvest's bid for 25% of Nampak's shares valued the company at a discount to its closing share prices on 3 September.

"The offer therefore implies that shareholders should forego immediate value of up to 8.9% in exchange for the introduction of Bidvest as a shareholder," stated Nampak.

At the start of the month, Bidvest said it would issue one Bidvest share for every 7.5 Nampak shares. The offer valued Nampak at around £700m (SAR10bn) and would add to the 5% stake it already owns.

The company highlighted that, should the bid be successful, then it would give Bidvest a blocking stake in Nampak without them paying a control premium.

Nampak management argued that the current share price does not reflect the "long term potential" of the business following the implementation of its strategic plan to rationalise the business.

Over the past five years the company has rationalised and closed approximately 40 sites. However, investment is planned in a can manufacturing plant in Angola and a corrugated paper mill in Rosslyn, South Africa.

Nampak said: "While 2008 has been a very challenging year, management believes that Nampak's strategic plan will unlock value for the shareholders over the next three years."

Bidvest is Africa's biggest company by turnover, with sales of £4.6bn, and has recently stated its intention to double in size by 2010.

It operates worldwide in a diverse range of sectors including freight management, food, electrical products, automotive retailing, packaging closures and office products.