Australian packaging group Amcor has entered into a A$330 million (€198m) agreement to buy Rexam's healthcare flexibles packaging business and will also buy out Danisco and Ahlstrom's 28.1 per cent minority stake in its Amcor Flexibles Europe business for €99.5 million.
The new deals come on the end of a A$4 billion acquisition spree that has seen Amcor successfully expand its plastic bottles and flexible packaging businesses over the last two years. Once completed, the acquisitions will make Amcor the largest supplier of flexible materials to the healthcare industry.
The company's chief executive, Russell Jones said in a statement that the Rexam deal is consistent with the company's strategy of targeting higher value added and higher growth market segments. He said that the purchase price will allow Amcor to make a 15 per cent return on the investment by the end of the third year.
Jones said there is considerable scope for synergies across the two businesses with forecast benefits of A$17 million over the next three years. It also provides Amcor with a firmer footing in the US market. The deal is expected to close in early October.
Rexam's businesses had sales of A$390 million and the firm operates 10 plants in seven countries, including four in the US and one each in England, Ireland, France, Singapore, Puerto Rico and Brazil.
Taking full control of Amcor Flexibles Europe from Danisco and Ahlstrom will enable the company "to obtain 100% of the synergies and growth going forward."
"Amcor Flexibles Europe has successfully integrated the three businesses over the past two years and this year increased operating margins from 4.7 pct to 6.2 pct with return on funds invested up from 8.6 pct to 11.0 pct. Going forward, we anticipate further strong growth from the flexibles business," Jones said.
Analysts responded warmly to the news, pointing to Amcor's strong results for the year ended June 30, released at the same time as the new deals were announced. The company reported a 43 per cent rise in sales to A$10.7 billion, thanks mainly to the acquisition of the Schmalbach-Lubeca PET plastic bottles company, and profit before interest, tax and amortisation (PBITA) of A$869 million, up 39.7 per cent.
Jones also predicted that there would be further consolidation in the packaging industry, with the key players, led by Ball, Rexam, Amcor and Alcan (which has made a hostile bid for France's Pechiney), according to a Reuters report.