Amcor Limited (ASX: AMC) today announced that Bemis shareholders have voted in favour of the Transaction Agreement that will see the merger of two consumer packaging companies, Amcor and Bemis.
NYSE-listed Bemis convened a special meeting on Thursday 2 May 2019 in the United States in which nearly 76% of shares outstanding were reportedly voted in favour of the transaction and of the votes cast, approximately 96% were in favour of the transaction.
Under this transaction, Amcor will takeover Bemis in an all-stock consideration agreed at an exchange ratio of 5.1 Amcor share for each Bemis share at US$75.75 per Bemis share. The merger would lead to an establishment of a new company, New Amcor, under which Amcor and Bemis shareholders would hold 71% and 29% ownership respectively.
The key highlight of this transaction is the cost synergy potential of ~US$ 180 million on the combination of two complementary companies. The strategic rationale of the transaction further outlines the stronger value proposition for customers, employees and the environment and the company’s objective to become a global leader in Flexible Packaging.
More on the numbers front, the combined synergy of Amcor and Bemis is expected to deliver ~US$13 billion sales, ~US$2.2 billion in EBITDA, and ~US$1 billion+ cash flows. The company eyes the transaction to assist in securing the leadership position in Rigid Container in the Americas region while being a sizeable global player in Closures and Specialty Cartons.
For the half year ended 31 December 2018, the company reported PAT and EPS 3.4% higher than last year. PBIT was up 2.4% on constant currency basis including 1.9% improvement in the Flexibles segment and 5.6% growth in Rigid Plastics.
Flexibles Segment- In constant currency terms, the Flexibles segment is reportedly anticipated to deliver solid PBIT growth in Fiscal 2019, compared with PBIT of US$835.1 million achieved in Fiscal 2018. The underscores the estimation of modest organic growth, which assumes no earnings impact related to movements in raw material costs, net benefit from prior period acquisitions of ~USD 10 million after deducting costs to integrate and achieve synergies, as well as the incremental and final restructuring benefits related to initiatives previously announced on 9 June 2016, of approximately USD 10 million.
Rigid Plastics Segment- The Rigid Plastics segment is expected to deliver favourable momentum in PBIT with the net benefit from prior period acquisitions of ~US$5 million to US$10 million after deducting costs to attain and integrate synergies. The company further takes into account modest organic growth and approximately USD 5 million to USD 10 million of benefits from restructuring initiatives.
Amcor-Bemis merger transaction is expected to close in the second quarter of calendar year 2019.
A look into the stock performance:
AMC stock price edged up by 0.308% to last trade at $16.280 as at 3 May 2019. The stock closed at a price to earnings multiple of 20.060x with a market capitalisation of $18.8 billion. Over the past 12 months, the stock has gone up by 20.04% including a positive price change of 17.18% recorded in the past three months.
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