Kong Kowloon, Hong Kong, 16 June 2010 -- Amcor has reached an agreement to purchase the assets of Ball Plastics Packaging Americas from Ball Corporation. The transaction is subject to regulatory approval in the USA.
The purchase price is USD 280 million, which represents four times the last 12 months acquired EBITDA of USD 70 million. (Amcor is only acquiring the plants. Therefore, EBITDA effective at closing excludes Ball Corporation corporate and divisional SG&A charges.) The business has five plants in North America and sales of approximately USD 600 million.
Approximately 50% of the earnings of the business are derived from the Diversified Products and Custom Beverage segments, and 50% from the Carbonated Soft Drinks and Waters segment.
The acquisition presents a significant opportunity to improve operating efficiencies and achieve synergies as the businesses integrate. Net synergy benefits are anticipated to be approximately USD 35 million. The cash cost to achieve these synergies is expected to be approximately USD 45 million with an additional noncash writedown of USD 30 million.
Inclusive of net synergies, the EBITDA is targeted at USD 105 million at the end of year three. The total cost to achieve these earnings is USD 325 million, comprised of USD 280 million purchase price and USD 45 million to deliver synergies. This represents an EBITDA multiple, post synergies, of 3.1 times.
The acquisition will expand Amcor’s Diversified Products business. The Diversified Products business targets the health care/pharmaceutical, personal care, food, and distilled spirits end markets. The acquisition brings exposure to new growth opportunities including wine bottles, retort packaging for food, and high density polyethylene (HDPE) and polypropylene (PP) containers for various market segments.
Additionally, Amcor Rigid Plastics will be positioned to offer a broader range of innovation and technology-based solutions to customers. The acquisition of Ball Plastics Packaging Americas brings with it expanded capabilities, including exciting developments in multilayer, retort, and barrier technologies as well as the assets and know-how to manufacture HDPE and PP extrusion blowmolded containers.
Amcor Rigid Plastics North America had sales of approximately USD 175 million in Diversified Products before the acquisition of Alcan Pharma Plastics Packaging. Following the acquisition of Ball Plastics Packaging Americas and Alcan Pharma Plastics Packaging, sales in the Diversified Products division will increase to approximately USD 425 million.
The acquisition will be funded from existing undrawn facilities at an interest cost of approximately 5%. Following the acquisition, gearing will be approximately 46%.
"This is an important strategic opportunity to further expand our position in the Diversified Products' market," said Ken MacKenzie, Amcor's managing director and CEO. "This is a high growth market, and the capabilities of the Ball acquisition will help us expand our business in North America and to leverage new technologies and products in our growing Latin America business.
"In the current global economic environment, there are opportunities to acquire businesses at prices that are substantially lower than a few years ago,” MacKenzie said. “The significant synergy opportunities this acquisition generates will underpin strong returns from the first full year and have a positive impact on earnings per share."