Amcor And Bemis Transaction Update On Asset Sale Related To US Antitrust Clearance

Amcor And Bemis Transaction Update on Asset Sale Related To US Antitrust Clearance

Amcor Limited (ASX: AMC) is a global leader in developing as well as producing high-quality, responsible packaging various products under the category such as food, beverage, pharmaceutical, medical device, home and personal care and other products. Further, Bemis is a global manufacturer of flexible packaging products and pressure-sensitive materials headquartered in Neenah, Wisconsin, United States.

Bemis Company, Inc. (NYSE: BMS) and Amcor Limited (ASX: AMC) as per the earlier announcements were in advanced talks with the team of the Antitrust Division of the US DOJ to resolve the antitrust concerns raised with regard to the combination of Bemis and Amcor.

On 22 April 2019, Amcor signed a binding agreement with Tekni-Plex Inc in order to sell its Amcor plants in Ashland (MA), Milwaukee (WI) as well as a part of the Madison (WI) plant. The total cash consideration for the sale of these three plants is worth US$215 million.  However, the sale of these operations are still a matter of approval and consent and filing from the US Department of Justice. Once it gets approved, all antitrust clearances that are conditional to the closing of the transaction will get finalized.

From these three operations, through the sale of flexible packaging for certain healthcare packaging products, the annual sales revenue generated was US$100 million.

It is anticipated that the transaction would complete by 15/05/2019.

On 6 August 2018, Amcor Limited and Bemis Company declared that their board have unanimously approved the definitive agreement. Amcor Limited as per the agreement would acquire Bemis in an All-stock combination. As a result of the strategic combination of these two companies, both the companies would help in creating the global leader in consumer packaging. The combined revenue from the strategic combination was expected to be around US$13 billion with EBITDA of US$2.2 billion followed by annual cash flow after expenditure above US$1 billion. Post the All-Stock cash-free transaction, Amcor shareholders will be owning 71% of the combined company and Bemis will be holding 29% of the combined company. The announcement also highlighted that New Amcor would also be having a primary listing on the New York Stock exchange as well as a listing on ASX.

On 24 January 2019, the company confirmed that both the companies had made significant progress towards the closure of All-stock transaction and they were under the process towards securing the required anti-trust clearance along with other regulatory consent in all jurisdiction. However, documentation review by the US Securities and Exchange commission got delayed, due to the partial US government shutdown. As a result of which the company expected the transaction to complete in the Q2 of CY2019.

On 12 March 2019, the company announced its progress towards the transaction close.

On 11 April 2019, Amcor Limited and Bemis Company received unconditional Antitrust clearance from Brazil.

In the previous six months, the shares of AMC generated a return of 16.34%. The shares of AMC closed the day’s trade at A$15.50 (As on 23 April 2019), up by 1.04% as compared to its previous closing price. Amcor Limited holds a market capitalization of A$17.81 billion and approximately 1.16 billion outstanding shares and a PE ratio of 19.010x.


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