Amcor Limited (ASX: AMC) is into the development and production of packaging which is of supreme quality, for a variety of food, beverage, pharmaceutical, medical device, home and personal care and other products.
Bemis Company, Inc. is into global the manufacturing of flexible packaging products coupled with pressure-sensitive materials. It has several divisions spread across several parts of the world, and the packaging products and adhesive materials films of the company are distributed globally.
Post-approval from the European Commission on 11 February 2019, the companies have announced an important step toward closing their all-stock transaction.
There is an agreement to divest three plants of Bemis which are in the United Kingdom and Ireland, as mentioned in the terms and conditions of the approval. The annual revenues from these plants add up to US $170 million approximately, primarily driven by the sale of flexible packaging for certain healthcare products. The approval will help the European healthcare packaging business of Amcor, which is substantial in size and participates in attractive, high-value end markets.
The transaction is conditional to the approval from the regulatory authority in the United States and Brazil. The companies are already in discussions with the regulators in both countries, which involves the potential for required remedies.
Commission, collective potential remedies would represent an insignificant part of the overall sales for the combined company. Hence it would not impact the US $180 million of net cost synergies expected to be delivered by the end of the third year following the completion. The transaction is expected to close in the second quarter of the calendar year 2019.
Amcor recently has announced its results for the half year ended 31 December 2018. Profit after tax stood at US $328.5 million which is 3.4% higher than the last year on a constant currency basis. The earnings per share of the company were 28.4 US cents, up by 3.4% from the previous year on a constant currency basis. The profit before interest and tax were reported at US $509.6 million up by 2.4% over the last year on a constant currency basis. The operating cash flow stood at US $115.3 million which is 27.0% higher than last year.
As stated by the CEO of Amcor, Mr. Ron Delia the company had a good first half year with earnings growth in line with the expectations and balanced across the Flexibles and Rigids packaging segments. Cashflow and the balance sheet of the company remained robust, and the interim dividend increased to 21.5 US cents per share.
On the price-performance front, the stock of Amcor is currently trading at $14.630 with a marginal increase of 0.481% approximately during the day’s trade. It has a market capitalization of ~$16.86 billion. The stock has yielded a YTD return of 9.72% and posted returns of 2.10% and 5.81% and 9.06% over the last six months three-months and one-month period respectively. It has a 52-week high price of $15.370 and a 52-week low price of $12.665, with an average trading volume of ~3.52 million. The stock is trading at a PE multiple of 18.0x with its EPS at AUD0.809. It has an annual dividend yield is 4.29%.
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