Amcor likely to seal deal for plastic container maker

Berry is one of the world’s largest makers of plastic consumer containers and closures.

Amcor’s $13bn acquisition of Berry Global Group looks increasingly likely to gain majority approval from the target’s shareholders as two key investors have already offered their backing.

US-based institutional investor EdgePoint Investment Group, which owns about 13 per cent of Berry, is understood to have expressed its support for the deal, while activist investor Ancora, which owns about 3 to 4 per cent of the business, has made its view known that it sees upside of about 60 per cent in bringing the two companies together.

The understanding is that about 20 per cent have suggested acceptance and the deal needs about 51 per cent to succeed.

Amcor’s Australian institutional investors were originally wary of the deal, but they are now a small part of its register.

Before Amcor bought Bemis, Australian institutional shareholders accounted for about 70 per cent of the holders, and after that deal, it was about 40 per cent.

The level is now about 25 per cent.

Shareholders vote on the transaction within the next six months, and much of the trading in the Amcor stock will be determined by short sellers looking to cover positions.

The larger size of the company will likely move it into the S&P Index, which tracks the stock performance of 500 of the largest companies listed on stock exchanges in the United States, causing a rerating of its share price.

Berry is one of the world’s largest makers of plastic consumer containers and closures and the scrip merger cements Amcor’s position as the largest plastic packaging company in the world.

It is the largest industrials mergers and acquisitions transaction in Australia since CEMEX bought building materials group Rinker in 2007 for $US14.2bn.

Analysts believe it is likely to be the last major transformational acquisition for the $18bn Australian and New York-listed packager Amcor, with subsequent deals potentially linked to sales of lesser performing units.

Each Berry shareholder receives 7.25 Amcor shares, valuing the New York-listed stock at the time at $US73.59 – about 10 per cent above Berry’s last traded price before the deal was announced.

The combined platform is expected to lift Amcor’s annual sales from about $US14bn (about $US10bn of which comes from flexible packaging and $US3.3bn from rigid) to $US23.9bn, including about $US280m in top-line growth synergies.

Half of sales will come from North America, while the remainder will be from Western Europe (about 30 per cent) and Emerging Markets (about 20 per cent).