Amcor buys Bemis in mega-merger

Amcor is purchasing US packaging giant Bemis, in a merger which will create a new holding company, New Amcor, with Bemis shareholders owning 29 per cent.

 

The remaining 71 per cent of the company will be owned by Amcor shareholders, with New Amcor being listed on both the New York Stock Exchange (NYSE) along with the ASX.

 

The new company is expected to have a $17bn market cap, with $13bn in sales.

 

It will be incorporated in Jersey, US, with intended tax residence in the UK after closing. The company’s primary listing will be on the NYSE, with its ASX listing achieved through Chess Depository Interests (CDIs).

 

The duo expect to achieve sales of US$13bn in flexible packaging, operating across 160 plants, leveraging Amcor’s strong position in the Asia Pacific, the Middle East, Europe, and Africa, with Bemis’ strong presence in the North American flexible packaging market, and consumer packaging market.

 

New Amcor anticipates US$180m of pre-tax annual cost synergies by the end of year three, with EBITDA of US$2.2bn once they are taken into account.

 

Ron Delia, CEO, Amcor, says, "The strategic rationale for this combination and the financial benefits are highly compelling for both Amcor and Bemis shareholders. We are convinced this is the right deal at the right time for both companies, and with the right structure for both sets of shareholders to participate in a unique value creation opportunity. Amcor identified flexible packaging in the Americas as a key growth priority and this transaction delivers a step change in that region.

 

“There are an increasing number of opportunities arising for a leading packaging company to capitalise on shifting consumer needs, an evolving customer landscape and the need to provide responsible packaging solutions that protect the environment. With this transaction, Amcor will have a stronger value proposition with the scale, breadth and resources to unlock value from these opportunities, for the benefit of our shareholders, customers and employees.

 

"Amcor’s financial profile will be enhanced, and our existing capital allocation framework, or shareholder value creation model, will be maintained and strengthened with this transaction. The combined company expects to have an investment grade balance sheet that provides immediate capacity for further disciplined investment as well as a compelling, progressive dividend. Amcor will draw on our extensive merger integration experience to deliver the substantial benefits of this combination.”

 

Bemis was founded in Missouri in 1858, and most recently reached US$4bn in FY sales, with a US$4bn market cap. Amcor says Bemis has a leading position in flexible packaging, with 56 plants, 16,000 employees, operating across 12 countries. As a split, 95 per cent of its US$4bn in sales comes from flexible packaging, with the remaining 5 per cent in rigid.

 

Breaking it down by region, Bemis has 70 per cent of its sales in North America, with 18 per cent in Latin America, 7 per cent in Europe, the Middle East, and Africa, with the remaining 5 per cent in Asia.

 

Amcor was founded in the 1860s, and most recently achieved $9bn (US$6.6bn) in sales, with a $18bn (US$13.30bn) market cap. It is the global leader in flexible and rigid plastic consumer packaging, with 195 plants, 35,000 employees, operating across 43 countries.

 

Its sales are split fairly evenly between North America (34 per cent), Western Europe (31 per cent), and what it calls ‘Emerging Markets’ (30 per cent), with the remaining 5 per cent in ANZ.

 

All stock acquisition of Bemis will be done at a fixed exchange ratio of 5.1 shares for each existing share of Bemis, with an implied price per Bemis share of US$57.75 representing an upfront premium of 25 per cent to Bemis’ closing price of US$46.31 per share as of August 2.

 

Amcor’s board will incorporate three members of the Bemis board, adding up to 11 directors in total.

 

Graeme Liebelt, chairman, Amcor, will remain in his role, along with CEO Ron Delia, who will continue as the sole executive director on the board.

 

Closing of the transaction is conditional upon the satisfaction of customary conditions including regulatory and shareholder approvals.

 

New Amcor has pledged to develop all of its packaging to be recyclable or reusable by 2025.

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