Concerns have been raised about the prospects of further consolidation and rationalisation of Australia's plastics packaging sector following the announcement of the purchase of Detmold Flexibles by Amcor.
Amcor chief executive and managing director, Ken Mackenzie, announced the company has signed an agreement to acquire privately owned Detmold Flexibles, for $50 million, and will incorporate the business within its Amcor Flexibles Asia Pacific division.
Detmold Flexibles operates two plants in Melbourne and has sales of approximately $55 million. The acquisition is subject to ACCC approval.
The chief executive of the Packaging Council of Australia (PCA), Gavin Williams, told PKN the acquisition could be a forerunner of further consolidation within the country's plastics and flexible plastics sectors.
“It is part of a continuing rationalisation through mergers and takeovers that has been taking place in the industry,” he said.
“I think it is happening in part because of tight economic conditions. The fact is, a number of companies in the packaging supply chain are doing it tough.”
He told PKN that while to date the country's plastics sector had avoided such widespread consolidation, the Detmold purchase was a sign it too could face a period of rationalisation.
“The past few decades has seen substantial consolidation in such sectors as glass, metal cans and aluminium, but the plastics sector, particularly flexibles, is one where there has still been a number of smaller companies operating,” Williams said.
“But because there are still a lot of smaller plastics manufacturers and converters around, I think we can expect to see more of these sort of acquisitions happening in the near future.”
Amcor's MacKenzie said said the purchase will bring advantages to its customers.
“From a strategic perspective [the purchase of] Detmold Flexibles builds on the success of the 2012 Aperio Group acquisition,” he said.
“It enables the Australian flexibles business to strengthen its manufacturing centres of excellence with plants focused on specific technologies and end market segments.
“The acquisition will further improve our customer value proposition in the Australian market by enhancing the ability to invest in both product and process innovation. Given the manufacturing overlap in the businesses there is considerable opportunity for operational synergies.”
Amcor's purchase of Detmold Flexibles could signal a new round of consolidation in the local plastics sector, industry commentators say.
