Sign up for the Packaging Digest News & Insights newsletter.
January 29, 2014
2 Min Read
handshake photo Claudia Veja
Bemis Company Inc.has signed a definitive agreement to acquire the Food Americas operations of Alcan Packaging, a business unit of international mining group Rio Tinto plc , for $1.2 billion. Bemis will acquire 23 Food Americas flexible packaging facilities in the U.S., Canada, Mexico, Brazil, Argentina, and New Zealand. These facilities produce flexible packaging for the food and beverage industries.
“We are very pleased to add Alcan Packaging’s Food Americas business to the Bemis organization,” says Bemis president and CEO Henry Theisen. “In pooling our resources, we will diversify our existing technologies and product lines which will broaden our product offering and augment our technical capabilities. This acquisition provides value from all angles and is a prudent investment in Bemis’ future.”
For the year ended December 31, 2008, Alcan Packaging Food Americas recorded net sales of $1.5 billion and adjusted EBITDA of approximately $166 million. The purchase price represents an adjusted EBITDA multiple of approximately 6.7 times when taking into account the estimated $100 million of tax benefits related to the structuring of much of the transaction as a purchase of assets. Further adjusting the valuation for estimated annual run-rate synergies of $65 million results in an adjusted EBITDA multiple of approximately 4.8 times.
The transaction is expected to close by the end of 2009, subject to customary closing conditions and regulatory review. Bemis intends to fund the purchase price with a combination of $1.0 billion in debt and $200 million in equity. This financing structure was created to help maintain the company’s investment grade credit rating.
The transaction also is expected to increase Bemis’ global presence by adding nearly 4,600 employees to Bemis’ global workforce for a total of over 20,000 employees at 84 international manufacturing locations. It also is expected to offer substantial synergy opportunity as Bemis expects more $65 million of annual run-rate pre-tax synergies to be achieved by the end of the second year following the acquisition date.
“Bemis has historically maintained a strong balance sheet to ensure our ability to take advantage of opportunities like this,” said Theisen. “Alcan Packaging Food Americas has demonstrated a commitment to investing in their operations and their workforce. The combined companies are expected to generate cash flow sufficient to rapidly reduce debt outstanding while maintaining our combined portfolio of world class manufacturing facilities, investing in growth opportunities, and supporting Bemis’ historic dividend policy.
You May Also Like
Coffee's Still Hot in America, Especially When It’s ColdFeb 20, 2024|6 Min Read
What Does the EU MDR Extension Mean for Packaging?Feb 16, 2024|3 Min Read
Is Chlorine Dioxide the Answer to the 'EtO Problem'?Feb 15, 2024|4 Min Read
Best in New Food and Beverage PackagingFeb 15, 2024|2 Min Read