Amcor, an international packaging company, has reached an agreement to purchase the assets of Ball Plastics Packaging Americas from Ball Corporation for $280m. The business has five plants in North America and sales of approximately $600m.
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.
According to Amcor, 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.
Approximately 50% of the earnings of the business are derived from the Diversified Products and Custom Beverage segments, and 50% from the CSDW segment.
The company said that 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 $35m.
Inclusive of net synergies, the EBITDA is targeted at $105m at the end of year three. The total cost to achieve these earnings is $325m, comprised of $280m purchase price and $45m to deliver synergies. This represents an EBITDA multiple, post synergies, of 3.1 times, the company said.
The company added that the acquisition of Ball Plastics Packaging Americas brings with it expanded capabilities, including new developments in multi-layer, 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 $175m in Diversified Products prior to 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 $425m, the company said.
The acquisition will be funded from existing undrawn facilities at an interest cost of approximately 5%. Following the acquisition, gearing will be approximately 46%. The transaction is subject to regulatory approval in the US.