In one of the biggest deals ever undertaken by an ASX-listed business, Amcor is acquiring US-based Berry Group, in a move that will create a consumer packaging and healthcare global leader.
The all-scrip (no cash) merger will see Amcor take over Berry, with Amcor shareholders having 63 per cent of the combined company, and Berry shareholders owning 37 per cent, with the deal valuing Berry at $13bn (US$8.4bn).
The move enables Amcor to become a major global player in the rigid container business, complementing its existing business which is mainly flexibles. Amcor says its rationale for the deal is to diversify. Its last major acquisition, Bemis, was also mainly in flexibles. The new merger will also give Amcor a major route to market in Eastern Europe, while it opens up Asia and Latin America to Berry.
Amcor also cited sustainability as a reason for the deal, it will now have 1500 R+D staff working with a US$180m budget to develop new sustainable packaging solutions, with ten innovation centres around the world. It currently has 7000 patents, registered designs and trademarks.
Amcor CEO, Peter Konieczny, said, “This combination delivers on our strategy to accelerate growth by putting the customer first, elevating the role of sustainability, and orienting the portfolio toward faster growing, higher margin categories."
He also said, “We will have a more complete and more sustainable product offering, supported by stronger innovation capabilities, global scale and supply chain flexibility.”
Expected revenue for the new combined business will be US$24bn (A$37bn) with an EBITDA of US$4.3bn. Around 50 per cent of its revenue will come from the US. Amcor expects to save a whopping US$650m in synergies once the deal goes through. Given the different markets, it does not expect any major regulatory hurdles.
Amcor currently has 212 packaging plants in 40 countries and 41,000 staff, the new combined operation will have 400 packaging plants around the world, with some 75,000 staff.
The company said the combination “brings together two highly complementary businesses to create a global leader in consumer packaging solutions, with a broader flexible film and converted film offering for customers, a scaled containers and closures business and a unique global healthcare portfolio.”
The deal creates a global product offering in flexibles, containers and closures, by combining Amcor’s global flexibles and regional containers businesses with Berry’s regional flexibles and global containers and closures businesses. It combines two complementary global healthcare businesses, and says Amcor, strengthens its positions in “high-growth, high-value categories”, including healthcare, protein, pet food, liquids, beauty & personal care, and food service.
Although having its origins in Australia – Amcor was established in 1860 as a paper mill on the banks of the Yarra – today Australia accounts for just two per cent of the company’s business. The company shifted its headquarters to Switzerland, and its primary listing to the NYSE, following its acquisition of Bemis five years ago. It does still have around a quarter of its stock listed on the ASX.
