Amcor offers over $2bn for Alcan packaging businesses

17-Aug-2009 - Last updated on 21-Aug-2009 at 11:12 GMT

Related tags Alcan packaging Rio tinto group Amcor

Australian packaging giant Amcor has offered to buy the European and Asian arms of Alcan Food Packaging along with its pharmaceutical and tobacco businesses for $2025m (€1434m).

The announcement comes a month after Alcan Packaging owners Rio Tinto sold the US division of the company to Wisconsin-based packer Bemis for $1.2bn.

The parts of Alcan Packaging that Australia-based Amcor has now offered to acquire would add $4.1bn to its AU$9.53bn ($7.86bn) turnover. The deal would also increase the size of its workforce from 21,000 employees to 35,000 and add 80 plants to its existing 226 sites worldwide.

The proposed acquisition is subject to regulatory approval and consultation with European Works Councils, which give workers the opportunity to respond to the transnational plans of big companies operating in the EU. Closing the acquisition is therefore not expected for several months.

Growth plans

Reports linking Amcor and Alcan have been circulating for over a year, with analysts suggesting that a deal would help Amcor realise its growth ambitions.

“Alcan Packaging remains the most obvious solution to Amcor’s growth challenge, given the neat strategic and growth aspects (the acquisition) would bring,” said the Royal Bank of Scotland (RBS), in a note to investors yesterday, after Amcor halted trading on the Australian stock exchange.

Amcor said in statement today that the acquisition would help it achieve its goal of growing its flexible packaging and folding carton businesses.

Financial position

The company also said it is in a solid financial position to pursue the acquisition. In financial results published today Amcor reported a slight increase in net debt to AU$2643m and profit after tax before significant items of $360.5m, down 2.3 per cent on last year.

After Rio Tinto bought Alcan back in 2007 the company was left with $38bn in debt. Since then earnings have dropped prompting the company to sell assets totaling $6.6bn over the past 18 months.

Reacting to the offer for its remaining food, pharmaceutical and tobacco businesses, Rio Tinto CFO Guy Elliot said: “We believe Amcor's offer is in the interests of all stakeholders.

“These businesses would be acquired by a leading player in the global packaging sector that is very well placed to enable ongoing success of the businesses.”