International packing giant Amcor Limited (ASX:AMC) announced the acquisition of Brazilian tobacco packer Souza Cruz in a report to the ASX. Chief Executive Ken MacKenzie announced yet another purchase of a bolt-on packaging company. Two weeks ago the company agreed to pay $US22m for Nampak Flexible, the market leader in flexible packaging in South Africa. The new deal was struck between Amcor and British American Tobacco plc, the majority owner of Souza Cruz. The company agreed to pay British American Tobacco $US30m for the operation. Mr MacKenzie said the acquisition was aligned with the company’s strategic objective of growing its business operations in South America.
The acquisition, which is pending approval from Brazil’s Anti-trust authority, is expected to reach annual sales of approximately $US63m. Mr. MacKenzie noted that Brazil represents 35 per cent of the South American cigarette market and is the 12th largest tobacco market in the world. “It represents an excellent opportunity to support an important global customer by extending access to Amcor's global innovation platforms and strong operational capabilities,” he said. The company has made 16 other acquisitions over the past four years in rigid plastics and flexible packaging. All 16 investments have delivered positive returns either at or above projections. The global packaging company said it has identified a $US2bn industry in potential deals in emerging markets such as Africa, South America and Asia.
Shares of AMC have advanced 41.22 per cent in the last 12 months. AMC is also up 5.45 per cent so far this year.
Author: Imran Valibhoy
Apr 09, 2015
Since Joining the firm in 2006, Imran has worked on a range of M&A and Capital Market transactions in the natural resources, mining as well as projects in the renewable energy sector. Prior to joining Wise-owl, Imran worked at Euroz Securities in Perth, aiding in the advisory and valuation of companies in the mining and industrial sectors in Australia. Imran has a Masters in Banking & Finance from City University's Class Business School in London and a Bacheloor degree in Commerce from UWA.