The European Commission has granted conditional approval for Amcor Ltd.'s $6.8 billion acquisition of U.S.-based packaging firm Bemis Co. Inc.
In a Feb. 11 statement, the commission said the two packaging giants had offered to divest the “entire medical packaging business” of Bemis in the European Economic Area (EEA) to address the E.C.'s competition concerns.
Bemis' European medical business includes three plants in the United Kingdom and Ireland, with approximately 150 million euros ($169.5 million) annual sales in flexible packaging for healthcare products.
The Commission said it examined the transaction in markets for flexible packaging for medical use and food products in the EEA, where the activities of Amcor and Bemis overlap.
The commission established that both Amcor and Bemis, based in Neenah, Wis., were the “most significant players” in the flexible packaging for medical use in the EEA.
“The merged entity would have created a player three times larger than the second largest supplier, on a fragmented market with many small suppliers,” the Commission added.
The Commission noted that barriers of entry were “extremely high” in this market, and that “customers could not easily switch suppliers.”
As a result, the Commission was concerned that the transaction would negatively affect competition on the market for flexible packaging for medical use and could lead to “higher prices, less choice and less innovation.”
In its statement, the Commission said that the offer to divest Bemis' medical packaging business in the EEA ‘fully addressed' its concerns.
Melbourne, Australia-based Amcor announced the substantial all-stock acquisition in August 2018, aiming to close the deal early this year.
Both companies say the transaction is transformational, giving Amcor a global flexible packaging presence when combined with its existing operations.