Amcor PET Packaging plans to buy the plastic container assets of Alcoa Inc. in South America, significantly strengthening Amcor's PET foothold in that region.
Amcor, based in Melbourne, Australia, will pay A$115 million (US$76 million) to buy the PET bottle operations, which reported sales of about US$130 million last year, according to Pittsburgh-based Alcoa.
The deal includes PET blow molding and preform injection molding operations that currently are performed at nine Alcoa facilities spread across six countries. Alcoa will keep five of the plants that also make caps and closures. Amcor will move PET-related equipment from those sites to Amcor plants in South America, Amcor spokeswoman Shelley Steele said in a June 2 telephone interview.
Amcor has not decided on the fate of the remaining four Alcoa locations, although Amcor does expect to evaluate all of its South American sites with an eye toward improving efficiency and service. Amcor announced that it expects to gain more than A$8 million (US$5.3 million) annually within three years through the rationalization plan.
The deal, to be completed in the third quarter, is part of a cutback Alcoa announced in January in both noncore businesses and personnel. The PET bottle plants are the only such facilities owned by Alcoa's packaging business.
Amcor will record about US$2 billion globally for its PET business during the current fiscal year, ending June 30, said Steele, who is based at Amcor's Manchester, Mich., headquarters for global PET operations. The firm has 14 PET container plants in Latin America - both separate and on-site customer locations - and recorded sales of A$600 million (US$397 million) in the region last year, Amcor Managing Director Russell Jones said in a news release.
The Alcoa sites are in Brazil, Argentina, Colombia, Peru, Uruguay and Chile. Together, they produce about 1.7 billion units annually, about 75 percent of that in preforms and the rest in blown bottles.
The aluminum maker bought out the minority interests in the South American plants in May. An Alcoa spokesman was unavailable for comment.
The Alcoa plants specialize in containers for water and carbonated soft drinks. The company has relationships with bottle giants Coca-Cola Inc. and PepsiCo Inc. in Latin America, as does Amcor. Those agreements are expected to continue, Steele said.
Amcor considers the region one of the fastest-growing areas in the world for PET bottles, Jones said.
Political and social unrest have hindered some growth potential, but that is balanced by a strong regional base of customers and consumers, Steele said. The population in that area is largely young, and that group is among the heaviest beverage drinkers, Jones added.
Amcor claims to have the largest market position in Latin America among PET container producers, Jones said. The company also said it is the largest PET packaging producer in North America, a position it has held since purchasing the plastics business of Ratingen, Germany-based Schmalbach-Lubeca AG in May 2002.
Steele said Amcor expects to record about US$6 billion in total sales for its current fiscal year.