Australia’s Amcor Ltd. agreed to acquire U.S. competitor Bemis Co. in an all-stock deal valued at $5.26B to expand sales of plastic packaging in the Americas.
Bemis shareholders will receive the equivalent of $57.75 a share in Amcor stock, according to a statement Monday. The offer represents a premium of 25 percent over Bemis’s closing price on Aug. 2, the day before news reports of an impending deal sent shares surging. The companies valued the transaction at $6.8B, including the assumption of debt.
The purchase hammered out by Amcor Chief Executive Officer Ron Delia is an effort by the Melbourne-based company to capitalize on growth opportunities for flexible packaging in North America and Brazil. It is the company’s biggest acquisition ever, adding $4.1B to company revenue -- all of it from flexible packaging products that are typically made of plastic.
“There are an increasing number of opportunities arising for a leading packaging company to capitalize on shifting consumer needs, an evolving customer landscape and the need to provide responsible packaging solutions that protect the environment,” Delia said in the statement.
The deal is at "medium risk" of hitting a snag during antitrust reviews in the U.S. and, possibly, China, Joseph Abbatiello, an analyst at MKM Partners LLC, said in a note. Bemis identifies Amcor as a “key competitor” in its annual report, he said.
Bemis fell 0.2 percent to $51.44 at 11:43 a.m. in New York, after climbing 11 percent on Friday. Trading in Amcor shares was halted in Australia on Monday.
About 70 percent of Bemis’s revenue is in North America from customers that include some of the biggest names in consumer products, such as Unilever NV, Tyson Foods Inc. and Johnson & Johnson. The manufacturer makes lids, bags, pouches, wraps and labels for everything from pet and baby foods to bread, coffee and raw meat.
Bemis Chief Executive Officer Bill Austen is cutting annual costs by $65M as the company struggles to increase packaging sales in the U.S. and Latin America, its biggest markets. The companies plan to reduce expenses by an additional $180M from the combination. Established in 1858 and based in Neenah, Wisconsin, the manufacturer has 16,000 employees at 56 facilities in 12 countries.
Amcor also is focused on plastic packaging, with about 54 percent of sales in flexible products and 29 percent in rigid products like bottles, according to a presentation on the deal. More than one-third of Amcor sales are in North America, with 31 percent in Europe and 5 percent in Australia and New Zealand.
Current Amcor shareholders will own 71 percent of the combined company, while Bemis holders will have the rest. The new company will be listed on the New York Stock Exchange and the Australia Stock Exchange. The deal, subject to regulatory and stockholder approval, is targeted to close in the first quarter of next year.
SOURCE: Amcor Ltd.