Unga Group is seeking a buyer for prime land and its stake in a paper packaging firm as the miller looks for new deals in the food processing business.
The Nairobi bourse listed miller says it will sell part or the entire 51 per cent stake in the packaging firm Bullpak Limited.
The property sales come as Unga aggressively pursues new acquisitions to widen its product range and geographical reach, with the disposal seen as a fund raising plan to ease the buyouts.
Bullpak manufactures paper packaging products that are used by manufacturers of fast-moving consumer goods, including Unga for its maize and wheat flour.
“The company be and is hereby authorised to dispose of all or part of the investment… in Bullpak,” reads part of Unga’s resolutions that were passed by shareholders at a November 28 annual general meeting.
“The group intends to dispose of a parcel of leasehold land and plant it no longer utilises in the next twelve months.”
Unga said Bullpak did not register volume growth in the year ended June, signalling increased competition in the paper packaging business where its top rivals are East African Packaging Industries and Dodhia Packaging.
Demand for paper packaging solutions is mainly from producers of tea, cement, horticulture as well as processed milk, maize and wheat flour.
The packaging industry has also come under intense competition from plastic packaging firms such as Techpack Industries and General Plastics.
Bullpak is minority owned by UK-based Nampak Holdings (49 per cent) and it is not clear whether Unga will cede majority stake to the multinational or seek a new investor.
Unga took full ownership of Unga Millers Uganda after buying out a 40 per cent stake held by minority shareholders for an undisclosed amount.
It is also seeking to buy a Nairobi-based bakery to give it a presence in the finished cereal goods market which it exited more than 15 years back with the sale of Elliots Bakeries.
The firm is in talks to acquire Ennsvalley Bakery — which makes bread, cakes, doughnuts, cupcakes and cookies — by offering it 25 million shares in Unga worth Sh446 million.
“We are working on strategic acquisitions that will expand both our product range and geographical coverage,” says Unga.
The miller reported 45 per cent jump in net profit to Sh508 million in the year to June, though its sales dropped marginally to Sh15.7 billion from Sh15.9 billion a year earlier.