Australian packaging force Amcor is buying its US rival Bemis in a $6.8bn deal, expecting to create combined revenues of US$13bn and EBITDA of US$2.2bn.
Amcor says the move will position it as a world a leader in consumer packaging, with the company focusing in on flexible packaging. The merger is still subject to regulatory approvals and approval from shareholders, with the companies expecting the transaction to be completed early next year.
Amcor shareholders will hold 71 per cent of the combined company, with Bemis shareholders to hold 29 per cent.
With the amalgamation, Amcor is establishing a primary listing on the New York stock exchange with an estimated market capitalisation of US$17bn, while maintaining its listing on the ASX. Amcor says it will maintain a critical presence in Wisconsin and other key Bemis locations, expecting to leverage the company’s plant network and innovation centre.
Ron Delia, CEO of 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.”
[Related: Amcor could wrap up Bemis deal]
In the Flexibles sector in both Asia and Europe, Amcor dominated over Belmis in the last calendar year, with the Australian firm generating around US$1.2bn in Asia and US$2.9bn in Europe. It contrast, Bemis generated US$200,000 in Asia and $0.3bn in Europe. The flexibles markets in both North and South America are a key lure for the Amcor, with it producing US$0.5bn in CY2017 in North America compared to Bemis making $2.8bn. In South America, Amcor will be just about doubling its sales, it made US$400,000 while Bemis produced US$500,000 last year.
Delia says, “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 is already an immense force in packaging, having produced $9bn in revenue in 2017. Bemis made $4bn in revenue last year. Amcor has around 35,000 employees across 195 plants in 43 countries, with Bemis adding its 16,000 employees in 56 plants across 12 countries.
Following the acquisition, Amcor expects to have an estimated market capitalisation of around $17bn, with more than 250 plants.
Bemis mostly operates within the US, making flexible and rigid plastic packaging materials for food, consumer and medical products. Its Australasian flexible packaging plant located at the Gold Coast.
Amcor’s new Board will comprise of 11 members, with three directors from Bemis being added to the current eight of Amcor.
[Related: Amcor profits up as sales slip]
Delia says, “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.”
William Austen, president and CEO of Bemis says, “The combination of Bemis and Amcor is transformational, bringing together two highly complementary organisations to create a global leader in consumer packaging. We believe this combination, which is an exciting growth story for both companies, will benefit all stakeholders.
“Our employees will benefit as part of a larger and more global organization focused on a commitment to customer service, integrity and supporting strong teams. In addition, the combination will enable us to offer global, regional and local customers the most compelling value proposition in the industry through a broader product portfolio, increased product differentiation and enhanced operating capabilities, while leveraging Bemis’ extensive U.S. manufacturing base and strengths in material science and innovation.
“Our shareholders will receive a significant premium in this transaction, reflecting the value we have built as an organization, as well as the opportunity to continue to participate in the upside potential of a more diversified combined company with greater scale and resources. We look forward to working together with Amcor to ensure a seamless integration.”
Delia says, “Amcor and Bemis have many things in common starting with proud histories that date back more than 150 years. Both companies are grounded in strong values, a shared commitment to innovation and value-added consumer packaging, and have talented management teams.
“We have always had a great deal of respect for Bemis and we are thrilled that its team in Wisconsin and around the world will be joining Amcor. Many people at Amcor today have joined us through acquisitions, including many of our leadership team, and we would expect Bemis to be well represented in Amcor at all levels of the organization.”
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