The move is expected to close by the end of the year and will boost Bemis’s annual sales from $3.8 billion (26 billion yuan) to $5.3 billion (36.2 billion yuan). The acquisition covers 23 flexible packaging plants, including 15 in the United States.

Of the purchase price, $1 billion (6.8 billion yuan) will come from debt financing and $200 million (1.4 billion yuan) from equity in the form of common stock or funds raised from a stock offering, Bemis officials said July 6.

Bemis edged out Australian packaging firm Amcor Ltd. in pursuit of the Alcan business. Officials with Melbourne-based Amcor confirmed earlier this year that they were in talks with Rio Tinto, a mining and exploration firm based in London.

Bemis placed first in a recent Plastics News ranking of North American film and sheet makers with related sales of $2.1 billion (8.5 billion yuan). Alcan Packaging placed sixth in the PN ranking with related sales estimated at $1.25 billion (14.4 billion yuan).

The purchase price represents an adjusted multiple of about 6.7 times EBITDA, when taking into account an estimated $100 million (684 million yuan) in tax benefits. After the acquisition, Bemis will have 20,000 employees at 84 sites worldwide. Chicago-based Food Americas employs 4,600 and reported pretax profit of $166 million (1.1 billion yuan) on sales of $1.5 billion (10.3 billion yuan) in 2008.

Bemis also expects to receive $65 million (444.3 million yuan) in annual synergies from the deal, which will increase Bemis’s food packaging sales by 72 percent.

When the deal is complete, Bemis will generate 70 percent of its sales from food and beverage packaging, 18 percent from non-food packaging and 12 percent from pressure-sensitive materials.

In a July 6 conference call, Bemis President and CEO Henry Thiesen said that Alcan Food Americas was “a clear, compelling strategic fit with our flexible packaging business.”

Food Americas “has blue-chip, multinational customers serving the food and beverage industry, and world-class operations in geographies in which we’re experienced,” he added.

The deal also will give Bemis new expertise in crystalline PET trays and aluminum foil. “Their focus on material science also complements our own technology,” Thiesen said.

Alcan’s CPET tray technology includes dual ovenable trays for microwave and conventional cooking. The trays are used for frozen and prepared foods such as meat, seafood, soups, baby food and pet food.

He also pointed out that the Food Americas unit was assembled from legacy business of Alcan and Pechiney — firms that were focused on the aluminum business, not packaging. With the acquisition, the unit “is now a valued part of the packaging industry,” Thiesen said.

Bemis officials were quick to point out that the deal “is not a consolidation,” and that the acquired plants “will operate substantially the same as they have been operated.”

“We believe capacity utilization is appropriate at this time…and we expect our legacy plants to benefit,” Thiesen added.

Post-deal, Bemis can expect growth rates similar to its own from the Alcan business in more mature North American markets, but higher growth rates in Mexico and South America, according to Bemis Senior Vice President and Chief Financial Officer Gene Wulf.

“Alcan has done pretty well in a difficult market in the last couple of years,” he said, adding that Bemis’s total resin purchase, including polyethylene “will increase dramatically” after the acquisition.

Wall Street seemed to react positively to the deal, sending Bemis’s per-share stock price up 4 percent to $25.25 in early trading July 6. Its price began the year around $25 but fell under $18 in early March before rebounding.

Bemis is coming off a first quarter in which overall sales fell 11 percent vs. the year-ago period to $843 million (5.8 billion yuan) and profit fell 14 percent to $36.7 million (250.9 million yuan). Flexible packaging accounted for 85 percent of the firm’s first-quarter sales.

Earlier this year, Bemis expanded its rigid packaging business by acquiring three plants in Brazil and one in Argentina from European packaging firm Huhtamaki Oyj for $43 million (293.9 million yuan).

Bemis has a partnership venture in Guangzhou.