Companies

Ramco gets nod to buy out packaging firm for Sh500m

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Polythene products making machines at Ramco warehouses on Mombasa road in Nairobi. FILE PHOTO | NMG

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Summary

  • CAK has allowed Ramco Plexus — the investment holding company for printing and packaging business under conglomerate Ramco — to buy out the 50 percent stake held by Carton Manufacturers in the packaging and labelling firm.
  • Ramco and Carton Manufacturers currently own Platinum Packaging on a 50/50 basis.
  • Kenya’s competition law requires that firms in merger undertakings, which have combined assets or turnover of at least Sh1 billion, to seek approval from the CAK before executing the deal.

Ramco Plexus has received unconditional regulatory approval to take full control of Platinum Packaging in a transaction that sources estimated at about Sh500 million.

The Competition Authority of Kenya (CAK) has allowed Ramco Plexus — the investment holding company for printing and packaging business under conglomerate Ramco — to buy out the 50 percent stake held by Carton Manufacturers in the packaging and labelling firm.

Ramco and Carton Manufacturers currently own Platinum Packaging on a 50/50 basis.

“The proposed transaction involves the acquisition of sole control of Platinum Packaging by Ramco Plexus, resulting in a change from joint control to sole control,” said the CAK in a note approving the transaction.

“The parties combined value of assets is over Sh1 billion and therefore meets the thresholds for a full merger notification as provided for in the Merger Threshold Guidelines under the Competition (General) Rules, 2019.”

Kenya’s competition law requires that firms in merger undertakings, which have combined assets or turnover of at least Sh1 billion, to seek approval from the CAK before executing the deal.

Platinum Packaging, which runs stores countrywide, controls a seven percent share in Kenya’s crowded market for flexible packaging and labelling products. This places it among the joint market leaders in the industry dominated by family-owned enterprises.

The other joint market leaders in the industry are Packaging Industries Ltd, Statpack Industries Ltd and Texplast Industries Ltd, according to the competition watchdog.

Ramco Plexus oversees operations in more than a dozen subsidiaries dealing in printing and packaging business under the Ramco stable, while Platinum supplies flexible packaging solutions in reels, pouches, digital labels and sleeves.

The merged entity will have more than Sh1 billion in assets, but will still control less than 10 percent market share.

“Whereas the acquirer [Ramco] has control of the target [Platimum], the parties’ market share will not change. Additionally, the merged entity will face competition for the other market players controlling 93 percent of the market as well as from imports and players,” CAK ruled.

“Premised on the foregoing, it is the Authority’s view that the proposed transaction is unlikely to substantially lessen or prevent competition in the flexible packaging market in Kenya.”

Ramco Plexus is one of five holding companies under the Ramco stable whose interests are also in manufacturing (Ramco Altus), services and trading (Ramco Oritsu), office supplies (Ramco Kora) and building materials (Ramco Ekon).

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