Amcor Ltd. will pay US$10 million for a 16.7 percent share in K Laser China Group, a subsidiary of Hsin-Chu, Taiwan-based K Laser Technology, a producer of holographic PVC, PET and oriented polypropylene film for packaging.
Packaging maker Amcor, in Melbourne, has options to boost its shareholding in K Laser China during the next two years to 50.1 percent by investing another another US$15 million in new shares and buying existing shares for US$12.6 million.
It also will buy 5.6 million new shares in K Laser Technologies for US$3.5 million, giving it a 4.2 percent shareholding in the parent company.
If Amcor decides to exercise its options for K Laser China, K Laser Technologies can require Amcor to invest US$8.2 million more in the parent company.
Amcor Managing Director Ken Mackenzie said the deal is part of the firm's portfolio review.
``The tobacco-packaging market in China has been identified as a strategic growth opportunity for Amcor. Over the past 12 months Amcor has developed a leading position in tobacco packaging manufacture in China through its investment in the Hong Kong publicly listed company Vision Grande Group Holdings Ltd.,'' he said.
Mackenzie said investing in K Laser China and its parent firm is ``an important step in expanding Amcor's value-added packaging materials'' portfolio. ``These [holographic] films are increasingly used in the manufacture of tobacco packaging for premium products in the Chinese market. The investment in K Laser Technologies will allow Amcor and K Laser to work together to expand the market for holographic films in other geographic segments.''
Amcor will appoint two directors to the K Laser China board. In China, K Laser has offices in Hong Kong and Dongguan.
John Murray, Amcor corporate affairs executive general manager, said Amcor expects to gain ``very little'' earnings from the deal. ``It is only a very small stake, so for us this is going to [attract] a modest sum.''
He said Amcor will not have to encourage tobacco-packaging clients to use K Laser products, because most Chinese tobacco companies already use them.
``In Australia, [tobacco] branding is basically printed on white board. In China, the boxes are far more decorative and almost artistic. The holographic film shimmers in light and creates [security against] counterfeiting,'' Murray said.
He would not comment on media speculation Amcor is having trouble selling its Australian plastic bottle, aerosol and tin can businesses.
The Australian, a newspaper published out of Sydney, said an increase in plastic packaging for products previously sold in cans and cheaper canning operations in the Middle East and Asia had deterred buyers from Amcor's operations.
``We haven't even publicly announced that we intend to sell those businesses,'' Murray said.