Amcor hails strategic significance of Ball Plastics takeover

By Rory Harrington

- Last updated on GMT

Amcor said its takeover of Ball Plastics Packaging Americas for US$280m is an important strategic move that will allow it to diversify packaging formats, as well as expand its manufacturing capabilities and market share.

The Australia-based company announced the agreement to purchase the Ball Corporation subsidiary - an operation with five plants in North America and annual sales of $600m – would also fuel its expansion in the United States, Canada and Latin America.

Innovation and capability boost

Amcor added the acquisition would boost its ability to offer a “broader range of innovation and technology-based solutions to customers”. ​Earlier this year, Peter Brues, president of Amcor Flexibles Europe & Americas, told FoodProductionDaily.com that its takeover of Alcan would give the company the opportunity to out-innovate its competition and the latest move appears to be in step with this strategy.

The deal brings with it expanded capabilities, including developments in multi-layer, retort, and barrier technologies ,as well as the assets and know-how to manufacture HDPE and PP extrusion blowmoulded containers, said an Amcor statement.

The buyout will also enlarge its Diversified Products business, which targets the food, pharmaceutical, distilled spirits and personal care markets. Growth is anticipated in wine bottles, retort packaging for food, and high density polyethylene (HDPE) and polypropylene (PP) containers for various market segments.

"This is an important strategic opportunity to further expand our position in the Diversified Products' market,”​ said company CEO and managing director Ken MacKenzie. “This is a high growth market, and the capabilities of the Ball acquisition will help us expand our business in North America and to leverage new technologies and products in our growing Latin America business.”

The company highlighted the diversified products division had more than doubled its sales potential with the Ball and Alcan takeovers – rising from $175m prior to the deals to a forecasted estimated value of $425m.

Synergies

MacKenzie said the current global economic situation had given companies like Amcor the chance to make acquisitions at prices “substantially lower than a few years ago”.

“The significant synergy opportunities this acquisition generates will underpin strong returns from the first full year and have a positive impact on earnings per share,”​ he added.

Amcor said the Ball acquisition would improve operating efficiencies and achieve synergies anticipated to be approximately U$35 million. The cash cost to achieve this expected to be around $45 million with an additional non-cash write-down of $30m. The company said it was targeting an EBITDA of $105 million by the end of year three. The transaction is subject to US regulatory approval.

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