Amcor plc will sell three former Bemis production plants in the United Kingdom and Ireland to U.S. private equity firm Kohlberg & Co. for $394 million as part of the process to acquire the Neenah, Wis.-based packaging giant Bemis Co.
The divestment was required by the European Commission which granted its conditional approval to Amcor's acquisition in February.
The three plants, in Londonderry, Northern Ireland; Clara, Ireland; and Brigg, England, represent "the entire medical packaging business" of Bemis and have a combined annual sales of around $170 million.
M&A market watcher Peter Schmitt said that he was surprised at the price that Amcor was getting, even with valuations currently high for quality assets.
“It looks like Kohlberg is making a huge play into medical and wants to become a major new player,” said Schmitt, managing director of Montesino Associates LLC in Wilmington, Del.
There were multiple bidders for the three plants, but Kohlberg’s involvement also was a bit of a surprise, according to Schmitt. “They kind of came out of the blue, but were wiling to pay a lot,” he said.
Schmitt added that medical packaging remains a desirable investment area for many reasons, including the regulatory market. “In medical, a competitor can’t just come in and say ’I’ll drop your price 10 percent if you switch to me,’” he said.
The sale remains subject to customary approvals, including the European Commission approval of Kohlberg & Co. as the buyer, said Amcor in a June 25 statement.
Amcor expects the transaction to close "in the coming weeks."
The Melbourne, Australia-based company completed its all-stock acquisition of Bemis on June 11.
Describing the acquisition as a "significant moment" for both companies, Amcor CEO Ron Delia said Bemis brought additional scale, capabilities and footprint to Amcor.
"[The acquisition] will strengthen Amcor's industry leading value proposition and generate significant value for shareholders," he added.
Amcor manufactures packaging for food, beverage, pharmaceutical, medical, personal care and other consumer products.
In 2018, the company generated combined sales of more than $13.4 billion from its 245 locations across the world.