Amcor and Bemis Transaction Receives US Antitrust Clearance Under Divestment Condition

The US Department of Justice has given the regulatory clearance to Amcor Limited (ASX: AMC) for the proposed acquisition of Bemis Company, Inc. under a condition to divest Amcor’s three manufacturing facilities and other assets. The companies had earlier got unconditional antitrust clearance from the Administrative Council for Economic Defense (CADE) of Brazil in April.

The terms of the proposed settlement require Amcor to divest its manufacturing facilities located in Madison, Wisconsin; Ashland, Massachusetts and Milwaukee, Wisconsin. Along with this, the company must divest its certain related assets to US-based Tekni-Plex Inc., or an alternate acquirer permitted by the US.

Following are the expected key dates for the Amcor and Bemis transaction:

Headquartered in Melbourne, Australia, Amcor Limited provides packaging solutions for a variety of food, beverage, pharmaceutical, medical device, home and personal care, pet care and other products. Based in the United States, Bemis also offers rigid and flexible plastic packaging for consumer products, food, medical and pharmaceutical companies around the globe.

The Board of Directors of Amcor and Bemis unanimously approved a definitive agreement in August 2018 under which Amcor and Bemis were expected combine in US$6.8 billion all-stock transactions. It was decided under the transaction that Amcor and Bemis’ shareholders would own approximately 71 per cent and 29 per cent of the combined company, respectively. Amcor and Bemis shareholders voted in favour of the Transaction Agreement between Amcor Limited and Bemis recently.

According to the US Department of Justice, the proposed acquisition would lead to the elimination of competition between two of the only three significant suppliers of three medical packaging products in Australia, without the divestiture.

The Department has complained that the combination of Amcor and Bemis would eliminate head-to-head competition between the companies as they both supply the three medical packaging products that are critical to the safe transportation and use of medical devices. This would also threaten the benefits realized by the medical care providers from that competition in the form of lower prices and better service.

Recently in April, Amcor announced a pro-rata FY19 final dividend of 12.0 US cents per share related to the period of March quarter following an announcement regarding a normal quarterly cash dividend to be paid to Bemis shareholders. The declared dividend was to be payable on 13th May 2019 with the record date and ex-date of 29th April 2019 and 26th April 2019, respectively.

Amcor’s half-yearly results for the half-year ending 31st December 2018 were announced in February this year. The company reported a statutory profit of US$267.6 million and an underlying profit of US$ 328.5 million during the period.

AMC closed higher on the Australian Securities Exchange today at AUD 16.460 (31st May 2019), with a rise of ~3 per cent relative to the last closed price. The stock has generated a huge long-term return of 273.09 per cent in the last ten years, with a YTD return of 20.42%.


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