The EC also confirmed that Amcor’s $2.025bn bid to acquire Alcan would still include the UK-based company’s Food Europe, Food Asia, Global Tobacco and Global Pharmaceutical packaging businesses.
The decision, announced late Monday evening, was expected to be unveiled much earlier in the day, prompting speculation of last minute wrangling between the EC and company representatives. Amcor hailed the verdict but sought to play down the significance of the concession it had made.
“Receiving approval from the European Commission is an important step toward closing the Alcan Packaging acquisition”, said Amcor managing director and CEO Ken MacKenzie. “The two plants to be divested represent less than 5 per cent of the combined sales in Europe and will not have a material affect on the synergies or operational improvements anticipated.”
Brussels gave its approval for the deal on the condition Amcor sell off “the major part” of its pharmaceutical flexible packaging business. The company confirmed it had agreed to divest its Tobepal plants in Spain which are part of the Amcor Flexibles division.
The two plants have combined sales of approximately €110 million and produce a range of pharmaceutical, food packaging and personal care products, said an Amcor statement.
The EC said “competition concerns in the European market for flexible packaging used in the pharmaceutical sector” had surface as a result of its initial investigation into the takeover.
“The merged entity would have a strong position in this market and in particular in the areas of laminated pharmaceutical sachets and in cold form foil used for blister packs,” said an EC statement.
The merger as tabled by Amcor would have eliminated “a significant competitive force and create a very strong supplier, while only a limited number of large competitors would continue to be active in the market”, the EC added.
While the green light from Brussels means Amcor has cleared a major hurdle in its Alcan acquisition bid, the transaction remains subject to regulatory approval in the United States and consultation with the European Works Council. The US competition authority is expected to deliver its decision by the end of the year.
The combined Amcor and Alcan Packaging businesses in Europe currently have sales of approximately US$4.8bn across 75 plants.