Anglo American has announced plans to list its paper arm Mondi on the London Stock Exchange (LSE) at the end of 2006/start of 2007.
Anglo told OPI that the listing was part of an effort to concentrate its core businesses. "We recognise that there are only limited synergies with our mining portfolio and therefore a decision has been taken to list Mondi on the LSE in 2006/7," said a spokesman for the company. "We believe Mondi has further growth potential for Anglo shareholders and it is in the group’s interest to prepare Mondi for listing."
The group’s preferred option for Mondi is an initial public offering of a 20-25 per cent stake in the next year. Mondi’s value will depend on how much debt Anglo transfers to it, but analysts expect it to go into the FTSE 100 index with a total value of $6 billion to $8 billion, making it the biggest paper and packaging business on the London market.
The company also revealed that it has been approached by interested parties with a view to buying the paper and packaging business. A London-based analyst said Anglo’s plans for listing the company are "a good move. It’s good for the shareholders to have clarity," said the analyst. "We’re quite pleased with the Mondi listing".
Anglo’s decision to spin off its paper arm is part of a strategic review that was first announced on 26 October last year.
A Merrill Lynch research report into Anglo’s strategic plan praised Mondi’s performance. "Despite the massively difficult trading conditions in Europe, the fact that Mondi still achieved a $495 million operating profit is testament to the group’s growth model, which has sought to buy and grow assets in eastern Europe, which are then well placed to sell in western Europe."