Packaging giants Amcor and Berry Global have moved a step closer to their proposed $13bn merger, with shareholders of both companies set to vote on the deal on 25 February.
The two companies have just filed a definitive joint proxy statement with the US Securities and Exchange Commission, informing it of the upcoming vote.
The all-scrip deal will create a company with some 400 packaging plants and 75,000 staff, located in numerous countries, and is intended to create a “global leader” in consumer and healthcare packaging solutions.
Amcor and Berry say the new company will be positioned to accelerate growth across a “broader and scaled” flexible film, containers, closures and dispensing packaging portfolio.
They also say the merger will enable significant opportunities to further refine the portfolio and leverage differentiated material science and innovation capabilities to “revolutionise” product development, and “solve the sustainability needs” of customers and consumers.
According to the AFR, new documents filed with regulators in the US show that Amcor came into the merger after Berry’s talks with a first suitor broke down. Figures show that Amcor will have to pay Berry $410m if this deal does not go through.
Shareholders will be the big winners, with “substantial value” expected to be created for both sets of shareholders through the delivery of $650m in identified cost, growth and financial synergies, and a “stronger” financial profile going forward, underpinned by “accelerated” volume and revenue growth, combined annual cash flow of $3bn, and a “commitment” to an investment grade balance sheet.
The combination is expected to deliver 35 per cent adjusted cash earnings per share accretion, and enhance long-term shareholder valuation creation from its current 10-15 per cent per annum to 13-18 per cent, through sustained higher earnings growth and continued annual dividend growth.
When Amcor acquired Bemis seven years ago it achieved ten per cent more in cost savings than it had originally targeted, taking US$200m of costs out of the combined business.
Around 45 per cent of Amcor shares are traded on the ASX – Amcor was founded in Victoria 165 years ago – but that figure will drop to 25 per cent if the deal goes through.
