Amcor Limited and NYSE-listed Bemis Company, Inc. secures the unconditional antitrust clearance from Brazil required to close their all-stock transaction announced on 6 August 2018. It marks another important step towards the strategic combination of two complementary companies, Amcor and Bemis, to create the global leader in consumer packaging.
As per the initially agreed terms of the transaction, Amcor will acquire Bemis at US$6.8 billion all-stock consideration at a fixed exchange ratio of 5.1 Amcor shares for each Bemis share, resulting in Amcor and Bemis shareholders owning approximately 71% and 29% of the combined company, respectively.
Amcor Limited (ASX: AMC) today announced that the Brazilian Administrative Council for Economic Defense (CADE) has granted unconditional antitrust clearance without any remedial action. However, the transaction remains subject to regulatory approval in the United States which had been delayed due to the partial US government shutdown.
Further, the companies are in talks with the US Department of Justice (DOJ) with respect to the potential for required remedies. The collective potential remedies, inclusive of remedies required by the European Commission, reportedly represent an immaterial proportion of the total sales for the ‘New Amcor’ and would not cast any financial impact on the net cost synergies of the combined company which is expected to deliver USD 180 million run-rate cost synergy by the end of the third year following completion.
The merger will see the integration of Amcor and Bemis through a newly established company, New Amcor, incorporated in Jersey as a tax resident in the UK. New Amcor will primarily be listed on the New York Stock Exchange (NYSE) and a listing on the Australian Securities Exchange (ASX) via CHESS Depositary Interests.
The transaction is reported to be EPS accretive that will involve double-digit Pro-forma Earnings Per Share (EPS) accretion for all shareholders with the run-rate cost synergies of US$180 million incremental to Bemis’ “Agility” improvement plan. The merger would reportedly result in the combined EBITDA of US$2.2 billion, revenues of US$13 billion, annual cash flow after capital expenditure of over US$1 billion.
On the strategic front, the combination of two highly-complementary packaging companies will capture an extensive global packaging market with a footprint across key geographies. The economies of scale are stated to be another strategic rationale that would fuel up the performance of the new company on the back of Bemis’ leading positions in North America and Brazil and Amcor’s significant presence in Asia, Europe and Latin America.
Amcor further intends to continue returning shareholders’ capital via a compelling, progressive dividend post-merger.
In today’s trading session, AMC stock price edged up by 1.01% to last trade at $15.505 on 11 April 2019. The stock closed at a Price to Earnings multiple of 18.980x with a market capitalisation of $17.78 billion.
Over the past 12 months, the stock of Amcor Limited has witnessed a positive performance change of 7.49% including an upsurge of massive 14.98% in the past three months.