JOHANNESBURG. Nordic paper manufacturers have good reasons to take a serious look at Mondi, the international paper subsidiary of Anglo American, the worlds third largest mining group.
Anglo American this week announced its largest re-structuring exercise since it moved its primary listing from Johannesburg to London seven years ago.
The aim was said to be to get back to the company´s core business, something that institutional investors have been advocating for years.
The company said that it will sell its controlling stake in South African stainless steel manufacturer Highfeld Steel and that it also considers lowering its stake in Mondi, the largest paper sack manufacturer in Europe.
Furthermore it would lower its stake in AngloGold Ashanti, the world’s second largest gold producer. One of the options seems to be an outright sale of Mondi´s assets, another option is a listing of Mondi. Mondi´s assets includes 50 percent in a newsprint plant in the UK, together with Sweden´s SCA, as well as subsidiaries in Austria, Hungary, Russia, Slovakia, Israel and, naturally, South Africa.
Mondi´s operating profit declined by 29 percent, to $ 233 million, according to Anglo´s interim report for the first six months this year. It means that Mondi´s contribution to Anglo is 8 percent, but the contribution to the revenue was considerably larger: close to 20 percent.
It will take special courage by CEO Tony Trahar to get rid of Mondi, which is very much his baby.
The Anglo share strengthened by close to 10 percent on the news that would include a $1 billion gift to shareholders in the way of a share buyback or special dividend exercise.
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