Amcor to Acquire AGI-Shorewood Tobacco Packaging Operations, Close Petri Cartonboard Mill
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Amcor, Australia, will acquire select printing assets of AGI-Shorewood's Tobacco Packaging and Specialty Folding Carton Operations for $114.8 million. The acquired business has plants or assets in South Korea, USA, Mexico, and China. The acquisition excludes the AGI-Shorewood plant in Smiths Falls, Canada. The acquisition expands Amcor's business in the higher growth regions of Asia and Latin America and includes specialty folding carton production assets in the U.S. The assets had 2012 sales of $126 million and EBITDA of $22 million. The EBITDA purchase multiple is 5.2 times based on the last 12 months of earnings.
Net synergy benefits are anticipated to be approximately $13 million and the net cash cost to achieve these synergies is expected to be approximately $20 million. The acquisition is expected to deliver a return on investment of more than 20% by the end of year three.
In South Korea, the business has approximately 30% share of this high value add market and supplies major international customers. The plant, built in 2004, is well capitalized and has a strong technology and product innovation focus.
Amcor's Managing Director and CEO Ken MacKenzie, said that "this acquisition is aligned with our strategic objective of expanding our position in emerging markets. The attractive purchase multiple and substantial operational cost synergies ensure the acquisition will generate very attractive returns for shareholders."
Amcor also announced during its six month report for business ended December 31 that the company will close its cartonboard mill in Petrie, Queensland, Australia, impacting some 300 jobs. Petrie, the only recycled cartonboard mill in Australia, produces 140,000 metric tpy of grayback and whiteback duplex board, supplying folding carton manufacturers across Australia and New Zealand. Amcor attributes the closure to "several structural changes in the competitive environment" and the fact that "the mill is no longer covering its cash costs." The mill is expected to close by the end of this year.
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