The deal will complement IVL’s existing footprint in West Africa, where it has a presence in Nigeria and Ghana.
“The acquisition of Medco aligns with Indorama Ventures’ strategic focus, which includes capitalizing on growth opportunities in emerging markets,” said Aloke Lohia, Group CEO, IVL.
“Medco’s strong presence in the domestic market and a longstanding customer relationship with all beverage majors operating in Egypt will enable the company to support growing local customers’ demand and provide a platform for further growth in the Middle East and African regions.”
Medco Plast manufactures recyclable PET preforms, injection molded products, and closures to multinational soft drink and water manufacturers in Egypt, with a 25% market share.
It has 11 production lines with a combined annual production capacity of 70,000 metric tons of PET preforms.
Following the acquisition, MEG will retain a 16% shareholding in Medco Plast, and the Samaha family 10%.
Egypt is one of the most developed and diversified economies in the Middle East, with economic growth of around 5%.
Egypt’s membership of COMESA regional economic bloc, coupled with its strategic location linking the EMEA and Asia, makes the country a gateway to the East and North African markets.
Abdul Galil Besher, chairman, MEG, said IVL ‘will add considerable depth to the existing technical strengths and business and management capabilities that Medco needs to enable its transformation to a world class supplier to the beverage, pharmaceutical and personal care sectors in the region’.
According to Mordor Intelligence’s report, ‘Middle East & Africa PET Market - Segmented by Product Type, End-user Industry, and Geography - Growth, Trends, and Forecast (2018 - 2023)’ April 2018, the region will see a CAGR of more than 6% during the forecast period due to PET recycling rates.
In South Africa, laws encouraging plastic recycling have been passed and companies, like Coca-Cola are using recycled-content plastic. Extrupet and Mpact Polymers are one of the major recyclers of bottle-grade PET on the African continent. Saudi Arabia currently recycles about 10% of its PET bottles.
It claims the food & beverage industry has dominated the Middle East & Africa PET market, owing to huge demand of PET resins for the manufacturing of bottles for soft drinks and other beverages and this continues to grow.
Iran’s food technology market has attracted more interest from international investors. The demand for packaging is likely to be further driven by the rising consumption of foodstuffs by its youthful population, of whom 60% are aged between five and 30.
Saudi Arabia already makes up almost 70% of the GCC’s packaging market in the GCC and its packaging sector continues to expand.