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 Packaging, Mergers & Acquisitions
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

Sealed Air moving headquarters, 1,200 jobs to Charlotte, N.C.

July 23, 2014 2:06 pm ET

Sealed Air Corp. — which is known for its Bubble Wrap brand — is moving its headquarters from Elmwood Park, N.J., to Charlotte, N.C., and ...    More

Image

Successful packaging is about more than the materials you use

July 23, 2014 1:49 pm ET

“People do not forget how packaging makes them feel," says Marla Donahue. "Remember how frustrated you felt when you couldn't get that...    More

Image

Contigo, Avex buy lets Newell Rubbermaid leapfrog new bottle development

July 22, 2014 4:11 pm ET

Newell Rubbermaid Inc. is ready to accelerate its move into the reusable water bottle business with the purchase of two on-the-go drinkware brands.    More

Image

Beer maker Carlsberg enlists suppliers for 'upcycling' project

July 22, 2014 11:14 am ET

Carlsberg Breweries A/S in Denmark has started an ambitious project with its suppliers to optimize its packaging for the purpose of “upcycling....    More

Image

Global market for plastic containers to top 46 million metric tons by 2021

July 22, 2014 10:56 am ET

German research company Ceresana has released a study saying that it expects the global market for plastic containers to rise to 46.2 million metric t...    More

Market Reports

Injection Molders Market Report & Ranking 2014

This special package contains our 132-page 2014 Market Report on the Injection Molding segment and our exclusive 2014 RANKINGS database of 500+ Injection Molders for a discounted package price.

Learn more

Plastics Recycling Market Review & Outlook 2014

This special report from Plastics News examines the North American plastics recycling industry and provides insight into indicators that impact market viability, including Resin pricing trends for virgin and recycled market material and historical Resin production trends for post- consumer and industrial waste.

Learn more

Shale Gas Market - Analysis of North American Region

This report highlights the impact of shale-based natural gas on the North American plastics market and features an in-depth analysis of production trends in the United States during 2013 and a forecast for 2014 and beyond.

Learn more

Upcoming Plastics News Events

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

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

More Events