Amcor to Acquire Berry Global in $8.4 Billion All-Stock Deal
Amcor to Acquire Berry Global
Packaging giant Amcor (NYSE: AMCR) has announced an agreement to acquire Berry Global Group (NYSE: BERY) in an all-stock deal valued at approximately $8.4 billion. The transaction is expected to close in the first half of 2023, subject to regulatory approvals and customary closing conditions.
Benefits of the Acquisition
The acquisition will create a global leader in the packaging industry, with combined sales of approximately $18.5 billion. Amcor expects the combination to deliver significant cost synergies and revenue growth opportunities.
- Cost Synergies: Amcor estimates that the transaction will generate annual cost synergies of $150 million within three years of closing. These synergies will be achieved through operational efficiencies, procurement optimization, and overhead reduction.
- Revenue Growth: The combined company will have a broader product portfolio and a wider geographic reach, which will enable it to cross-sell products and expand into new markets.
Leadership and Integration
Following the closing of the transaction, Amcor CEO Ron Delia will lead the combined company. Berry Global CEO Tom Salmon will remain with the company as a senior advisor.
Amcor plans to integrate Berry Global's operations into its existing business, leveraging its scale and expertise to drive growth and improve profitability.
Market Reaction
The news of the acquisition was met with a positive response from investors. Amcor's stock price rose by approximately 5% in premarket trading, while Berry Global's stock price increased by about 3%.
Analysts believe that the deal will create a formidable competitor in the packaging industry and enhance the long-term growth prospects of both companies.
Financial Details
Under the terms of the agreement, Berry Global shareholders will receive 0.8355 Amcor shares for each Berry Global share they own. The deal implies a purchase price of $90.73 per Berry Global share, based on Amcor's closing stock price on November 10, 2022.
Amcor will finance the acquisition through a combination of debt and equity. The company has secured a $6 billion bridge loan to fund the transaction, which it plans to replace with a combination of long-term debt and equity offerings in the future.
Conclusion
The acquisition of Berry Global by Amcor is a significant transaction that will create a global leader in the packaging industry. The deal is expected to deliver significant cost synergies and revenue growth opportunities, and it is likely to be welcomed by investors.
