Amcor agrees to sell PET business

La Seda de Barcelona, Europe's largest PET manufacturer, is consolidating its market-leading position with the acquisition, the third purchase this year for the Spain-based company. The move confirms industry confidence in the future of PET. The packaging is becoming increasingly popular with food and beverage makers because of its recylability and convenience in relation to glass and metal. Moreover, the sale represents another shakeup in the packaging market that has already seen significant changes this year. In May metal packaging giant Alcoa attempted a hostile takeover of rival firm Alcan in a deal worth a reported $33bn (€24bn). Earlier this year, carton manufacturer SIG Holding was subject to a takeover battle involving a New Zealand investor and two European companies. Rank, owned by billionaire Graeme Hart, now controls the world's second largest carton maker, adding to his recent acquisitions of Blue Ridge Paper and the Evergreen Packaging unit of International Paper. Since Amcor initated its reformation agenda in August 2005 the company said the total proceeds from asset sales, upon completion of the European PET sale, would be about €700m. The proceeds from the sale would be redeployed into specified growth market segments, and used to strengthen existing market positions to deliver improved earnings and returns, the company said. Amcor's PET business produces containers and preforms for food and beverage applications, including carbonated soft drinks, bottled waters, juices, isotonics, alcoholic beverages, edible oils, dressings, spreads and sauces. For the year ending 30 June 2007, the business' unaudited revenues were €545 million, with operating profit of €60m. The sale marks the end of difficult year for Amcor. Half year global profits for the group fell 13 per cent to €110m from €127m during the second half of last year. The group announced cuts in both its workforce and production capabilities within Western Europe, as part of plans to reduce costs by €30m by 2010. Earlier this year, Amcor announced it would be closing four of its fiber production plants in Australia to improve performance of its operations within the sector. The sites which supply carton and paper based packaging predominantly for the beverage and fast food industries will be closed as part restructuring measures designed to bring it in line with the growing demand for Amcor's flexible and rigid packaging products. The company said the deal is expected to be completed during the third quarter of 2007.