Australian packaging giant set for demerger

By Kate Tilley
Correspondent

Published: November 13, 2013 5:40 pm ET
Updated: November 13, 2013 5:41 pm ET

Related to this story

Topics Mergers & Acquisitions, Packaging
Companies & Associations Amcor Ltd.

MELBOURNE, AUSTRALIA – Amcor Ltd., the Australian-based multinational packaging company, is set for a US$2billion demerger and float in December.

Amcor will be split in two and a new company, Orora Ltd., listed on the Australian Securities Exchange on Dec. 18.

Orora will focus on the Australian and New Zealand fiber, glass and beverage can packaging markets, plus packaging distribution in Australia and North America.

Amcor will specialize in flexible and rigid plastic packaging and tobacco packaging for overseas markets.

Amcor Ltd. executive general manager for corporate affairs John Murray said: “Amcor will be a global leader in its market segments and in emerging markets.”

Broker reports suggest the company’s market value is between US$1.5 billion and US$1.6 billion, with debt of US$700 million, making a total enterprise value of US$2.2 billion to US$2.3 billion.

The 67,000 shareholders have been told if the demerger is implemented, they will receive one Orora share for every Amcor share held on that date. Shares have been trading at about A$10.60.

An Australian finance industry commentator, who did not want to be named, told Plastics News: “The market loves the idea of this demerger. There are significant cost saving opportunities in the Orora business that should put it in a good position in years to come.”

Amcor Managing Director and CEO Ken MacKenzie told the company’s annual general meeting last week the best outcome for shareholders is to separate the two businesses, “enabling each to focus on their own growth agendas and strategic priorities.”

“The business has an A$81 million cost improvement opportunity that should underpin earnings growth over the next few years and position Orora well for the next phase of its journey as an independent company,” he said.

He said Amcor post-demerger will have a more focused portfolio with two-thirds of its sales in flexible packaging and one third in rigid plastics.

Amcor’s earnings before interest and tax for the 2013 financial year were US$1.01 billion. That was generated from the three operating businesses: flexibles, rigid plastics and Australasia and packaging distribution.

MacKenzie said the flexibles business had an “excellent year” with profit before interest and tax up 11.9 percent to a record US$813 million.

“This improvement reflects ongoing operating improvements, benefits from acquisitions and continued good growth in emerging markets.”

Return on sales increased from 11.2 percent to 11.6 percent and return on average funds employed was a record 24 percent.

MacKenzie said the rigid plastics business had a “solid year.” Earnings were 5.2 percent higher at US$287 million, and returns improved from 15.5 percent to 16.9 percent.

“Although volumes in North America were adversely impacted by a relatively cool, wet summer, earnings for the region were higher. This increase was driven by strong cost management, operational improvements and growth in the diversified products segment.”

Independent corporate adviser Grant Samuel told daily finance newspaper The Australian Financial Review that the US$2 billion demerger is in shareholders’ best interests, even though Amcor will incur large one-off costs.


Comments

Australian packaging giant set for demerger

By Kate Tilley
Correspondent

Published: November 13, 2013 5:40 pm ET
Updated: November 13, 2013 5:41 pm ET

Post Your Comments


Back to story


More stories

Image

Pregis Corp. to get new owner

April 22, 2014 11:44 am ET

The private equity owner of Pregis Corp. is selling off its North American operations for an undisclosed sum.    More

Europe's bag use still expected to climb despite possible bag restrictions

April 22, 2014 9:29 am ET

Ceresana, a Germany-based research company, has released a report forecasting that by 2020 the sales volume of bags and sacks in Europe will reach 9....    More

DuPont: Asia's food packaging market at a major transition point

April 21, 2014 1:26 pm ET

DuPont Co. touted its packaging innovations and applications, and updated the firm's commercial status at a media event two days before the Chinaplas ...    More

Image

Savvy customers follow raw material prices as closely as processors

April 21, 2014 2:25 pm ET

Savvy customers closely follow the prices of raw materials. The result: in the film and sheet segment of the plastics industry, even if processors...    More

PolyQuest spins off FiberQuest unit

April 18, 2014 10:14 am ET

PolyQuest Inc. has spun off its FiberQuest unit — which distributes polyester staple fibers and cotton — as a separate company.    More

Market Reports

Thermoformed Packaging 2014 Market Review & Outlook North America

This in-depth report provides analysis and discussions of economic and political conditions, market trends, legislative/regulatory activity impacting supply and demand, business opportunities and threats, materials pricing, manufacturing technology, as well as strategies being implemented by thermoformed packaging companies. In addition, there are reviews of 25 leading thermoformers in the packaging segment, assessing their growth initiatives and performance metrics over 10 years.

Learn more

Automotive Market Review and Outlook 2014 The Americas

This 75-page report features in-depth analysis of the automotive industry for the Americas. It includes discussions of market trends, legislative/regulatory activity impacting production and threats as well as design strategies being implemented by the major automakers. Detailed charts and data tables outline North American automotive production over the last five years.

Learn more

Plastics Building & Construction Market Review and Outlook 2014 with MS Excel chart data

This report provides in-depth analysis of the plastic building and construction market for North America, including discussions of trends, opportunities, threats and the latest developments in construction trends that impact plastics processors.

Learn more

Upcoming Plastics News Events

May 6, 2014 - May 8, 2014Plastics in Medical Devices 2014

May 12, 2014 - May 12, 2014Plastics News Brazil Pharma Summit

September 10, 2014 - September 12, 2014Plastics Caps & Closures 2014

February 3, 2015 - February 7, 2015Plastics News Executive Forum 2015

More Events