Investors gave the thumbs down yesterday to the move by Australian packaging giant Amcor to buy US-based rival Bemis Company in a $US6.8 billion ($A9.2 billion) all – paper deal and shift its main stock exchange listing to America.
While the deal will create a company with revenue of $US13 billion, Amcor, which was established in 1860 in Victoria, will move its primary listing to Wall Street with an estimated market capitalisation of $US17 billion.
It will maintain a listing on ASX to try and keep local investors happy (imitating BHP, Rio Tinto, Resmed, Janus Henderson and CYBG which have dual listings with either US markets or London).
Emerging from the transaction will be a global leader in packaging with a more balanced, profitable exposure to emerging markets.
The transaction is being done at a fixed exchange ratio of 5.1 Amcor shares for each Bemis share, resulting in Amcor shareholders owning 71% of the combined company.
This equates transaction price of $US57.75 per Bemis share based on Amcor’s closing share price of $A15.28 last Friday August 3.
Amcor shares lost more than 5.8% today to $A14.39 as investors went off the deal and the decamping of the company to the US.
“The strategic rationale for this combination and the financial benefits are highly compelling for both Amcor and Bemis shareholders,” according to Amcor CEO Ron Delia.
“We are convinced this is the right deal at the right time for both companies, and with the right structure for both sets of shareholders to participate in a unique value creation opportunity,” he said in a statement justifying the deal.
“Amcor identified flexible packaging in the Americas as a key growth priority and this transaction delivers a step change in that region.”
Bemis’ President and CEO, William F. Austen, says the combination of Bemis and Amcor creates a global leader in consumer packaging.
“We believe this combination, which is an exciting growth story for both companies, will benefit all stakeholders,” he said in a statement.
“The combination will enable us to offer global, regional and local customers the most compelling value proposition in the industry through a broader product portfolio, increased product differentiation and enhanced operating capabilities, while leveraging Bemis’ extensive US manufacturing base and strengths in material science and innovation.”
The deal was well-leaked in the US business media, starting with a report last weekend from the Wall Street Journal.