Amcor $280m acquisition of Ball Plastics Packaging Americas

Filed by Shaun Weston

The purchase price is $280m, which represents four times the last 12 months acquired Ebitda of $70m.* The business has five plants in North America and sales of approximately $600m.

Approximately 50% of the earnings of the business are derived from the diversified products and custom beverage segments, and 50% from the CSDW segment.

The acquisition presents a significant opportunity to improve operating efficiencies and achieve synergies as the businesses integrate. Net synergy benefits are anticipated to be approximately $35m. The cash cost to achieve these synergies is expected to be approximately $45m, with an additional non-cash write-down of $30m.

Inclusive of net synergies, the Ebitda is targeted at $105m at the end of year three. The total cost to achieve these earnings is $325m, comprising $280m purchase price and $45m to deliver synergies. This represents an Ebitda multiple, post synergies, of 3.1 times.

The acquisition will expand Amcor’s diversified products business. The diversified products business targets the health care/pharmaceutical, personal care, food and distilled spirits end markets. The acquisition brings exposure to new growth opportunities including wine bottles, retort packaging for food, and high density polyethylene (HDPE) and polypropylene (PP) containers for various market segments.

Additionally, Amcor Rigid Plastics will be positioned to offer a broader range of innovation and technology-based solutions to customers.

Amcor’s MD & CEO, Ken MacKenzie, said: “This is an important strategic opportunity to further expand our position in the diversified products’ market. This is a high growth market, and the capabilities of the Ball acquisition will help us expand our business in North America and leverage new technologies and products in our growing Latin America business.

“In the current global economic environment, there are opportunities to acquire businesses at prices that are substantially lower than a few years ago. The significant synergy opportunities this acquisition generates will underpin strong returns from the first full year and have a positive impact on earnings per share.”

*Amcor is only acquiring the plants. Therefore, Ebitda effective at closing excludes Ball Corporation corporate and divisional SG&A charges.

Source: Amcor

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