Malbak told not to unbundle its MY shares

Shares in packaging group MY Holdings fell sharply yesterday after Malbak, the South African conglomerate, said plans to reduce its 64 per cent shareholding in the UK company had come unstuck.

In a statement, MY Holdings said Malbak had been advised by the South African Reserve Bank that current exchange control regulations precluded the unbundling of the investment in MY Holdings.

Shares in MY Holdings fell to 117p on the news, though they recovered in late trade to close at 123.5p, down 2.5p on the day.

Speculation about the future of Malbak's stake has seen MY Holdings' share price almost double in the past year.

The shares received another fillip in December when MY Holdings announced that alternative structures were being evaluated to allow Malbak shareholders to retain their effective interest in the company, subject to the approval of the South African Reserve Bank.

Malbak, which is in the process of liquidating its assets, had hoped to distribute MY Holdings shares to its shareholders.

Other options included selling the stake to one buyer or placing it with institutions. Such moves would greatly increase liquidity in MY Holdings' shares and possibly flush out a bidder.

MY Holdings said other ways of unbundling Malbak's holding in the company were being considered and a further announcement on the progress of its unbundling was expected shortly.

MY Holdings has expanded rapidly in recent years through a series of acquisitions in niche areas.

The latest was TWG, which strengthened the group's position in self-adhesive labels, which had been MY Holdings' weakest area.

At the company's annual meeting a fortnight ago, MY Holdings told shareholders that business so far this year had been good with strong demand from its high-margin healthcare and food packaging divisions.