Amcor will transfer its main sharemarket listing to the New York Stock Exchange in its $US$6.8 billion ($9.2 billion) all-scrip buyout of United States packaging group Bemis Company as it elevates its position on the global stage to become the world’s largest plastic packaging group.
Amcor will farewell the Australian Securities Exchange as its primary home after the deal which was officially announced overnight. Amcor will still trade on the ASX but only through Chess Depositary Interests.
Amcor will issue 5.1 of its shares for each Bemis share, in a transaction valuing Bemis shares at $US57.75 per share. Bemis shareholders will end up with 29 per cent of the combined company and Amcor shareholders will have 71 per cent.
Amcor chief executive Ron Delia said the combination of the two groups made perfect sense in an industry which is undergoing consolidation as the needs of end customers change and there is an increasing focus on environmental considerations when delivering packaging solutions to consumer goods companies.
“The strategic rationale for this combination and the financial benefits are highly compelling for both Amcor and Bemis shareholders,” Mr Delia said.
The “new” Amcor will have a primary listing on the New York Stock Exchange and existing Amcor shareholders will have the option to receive one New Amcor ASX-listed CDI or one new Amcor NYSE-listed share for each Amcor share held.
The deal is expected to be finalised in the first quarter of calendar 2019 and requires approval from shareholders of both companies, and regulators.
Analysts and fund managers have been closely scrutinising potential synergies, and Amcor has set the bar high in this respect. The company said it could obtain pre-tax annual cost synergies of about $US$180 million by the end of the third year. These savings would come from synergies in procurement and manufacturing.
The combined Amcor and Bemis businesses will have total revenues of $US13 billion. The new group will have a sharemarket capitalisation of $US17 billion.
Bemis operates 56 packaging plants in 12 countries but most of its operations are in the US. Amcor operates 195 packaging plants in 43 countries. Amcor’s corporate headquarters are in Zurich in Switzerland after it decided to shift most of the head office roles there from its traditional Melbourne home in 2015. Bemis is the No.1 player in flexible plastic packaging in the United States and in Brazil. Amcor is strong in Latin America.
Bemis is based in Wisconsin and was established in 1858. It provides packaging for food, healthcare and consumer goods including foil lids for yoghurt pots, flexible plastic pouches for sauces and soups, and printed plastic wrappers for cheese. About 70 per cent of its sales revenue comes from the US and the company has a workforce of about 16,000.
Bemis has been heavily restructuring its own operations in the past 18 months under a cost-cutting program known as Agility under its chief executive Bill Austen.
Mr Austen described the deal as “transformational” and he said there was a significant premium in it for Bemis shareholders.
Amcor chairman Graeme Liebelt will remain as chairman of the enlarged group, with the new Amcor to expand its board of directors to 11. Eight of the directors will be current Amcor directors, with 3 Bemis directors to join.