$2bn deal will create pharma packaging giant
pharmafile | August 19, 2009 | News story | Manufacturing and Production |Â Â Amcor, MAÂ
Australian company Amcor looks set to join the healthcare packaging giants via a $2 billion deal to purchase the pharmaceutical, food and tobacco packaging assets of Alcan, part of the Rio Tinto mining group with sales of $4.1 billion in 2008.
Last week, Rio Tinto completed the sale of its US packaging division to Bemis for $1.2 billion. The latest deal covers the firm's European and Asian packaging assets, and depends on Amcor raising some $1.3 billion via a rights issue.
Negotiations between Amcor and Rio Tinto have been going on for around a year, and Alcan has been on the block since 2007.
If the deal is completed, Amcor will become the worlds biggest supplier of pharmaceutical packaging with an increase in sales of around 50%.
The agreement boosts Amcors position in flexible packaging – rounding out its product portfolio which spans plastic, engineered film, aluminium, paper, paperboard and glass packaging – and comes after a protracted period of cost-cutting and restructuring at the Australian company under chief executive Ken MacKenzie.
It gives the business a much better geographic spread; once completed Amcor's revenues will come roughly one third apiece from North America, Europe and Australasia. The deal would also increase the headcount at the Australian company from 21,000 employees to 35,000 and add 80 plants to its 226 facilities around the world.
In the healthcare sector Amcor would claim a market share of around 56%, according to analysts at Merrill Lynch, which will almost certainly bring the deal under close scrutiny as it navigates the European and US anti-trust approval process. As a result the transaction is not expected to be completed for several months.
Amcor has just released its results for the 12-month period ended 30 June, with a 2% increase in sales to A$9.54 billion ($7.82 billion) and operating profit up marginally at A$1.08 billion.
Amcor Flexibles, which accounts for the bulk of the pharmaceutical packaging activities at the moment, saw a 10% decline in sales to A$2.89 billion, although the healthcare segment remained steady at around A$840 million.
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