Still firmly on the acquisition trail as it seeks to expand its position in emerging markets, Amcor has agreed to buy select printing assets of the tobacco packaging and specialty folding carton operations AGI-Shorewood. The purchase price is $114.8 million for the business which has plants or assets in each of South Korea, USA, Mexico and China.
Amcor said the acquisition excludes the AGI-Shorewood plant in Smiths Falls, Canada.
The acquisition expands Amcor’s business in the higher growth regions of Asia and Latin America and includes specialty folding carton production assets in the United States.
For the 2012 calendar year the acquired business had sales of US$126 million and EBITDA of US$22 million. The EBITDA purchase multiple is 5.2 times based on the last twelve months of earnings.
Net synergy benefits are anticipated to be approximately US$13 million and the net cash cost to achieve these synergies is expected to be approximately US$20 million. The acquisition is expected to deliver a return on investment of more than 20 per cent by the end of year three.
In South Korea the business has approximately 30 per cent share of this high value-add market and supplies major international customers. The plant, built in 2004, is well capitalised and has a strong technology and product innovation focus.
Amcor’s managing director and CEO, Ken MacKenzie, said: “This acquisition is aligned with our strategic objective of expanding our position in emerging markets. The attractive purchase multiple and substantial operational cost synergies ensure the acquisition will generate very attractive returns for shareholders.”
Speaking at the media briefing to announce the company's half year results on 18 February, MacKenzie said the Shorewood acquisition would improve the company's global footprint, expanding its presence in Asia, building its position in Mexico [where Amcor has recently purchased Aluprint] and improving its cost position in the US market.
