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Amcor agrees price for Aperio takeover – but the deal is far from done

By Rory Harrington , 07-Mar-2012

Amcor today announced it has agreed to pay A$238m (€191m, US$251m) for its controversial proposed takeover of Aperio - its major rival in the Australasian flexible packing arena.

The packaging giant said the deal would “significant benefits to customers in Australia, New Zealand and Thailand in terms of scale, efficiency, innovation and security of supply”.

However, question marks remain over the deal after a host of stakeholders, including industry players and competition officials, recently raised concerns about the takeover.

Leading Asia Pacific player

Aperio is currently the second largest flexible packaging player in the Asia Pacific serving a raft of sectors including bakery, snacks, confectionery, dairy, beverage and frozen foods.

It operates 13 plants across Australia and New Zealand and a modern facility in Thailand. The firm generates annual revenues of approximately A$350 million.

Amcor forecast that Net synergy benefits from the takeover were anticipated at around A$25m.

It said the acquisition would be “an important strategic addition” to its flexible packaging unit in the region.

“It creates the opportunity to develop a stronger platform that has the required scale and breadth of technologies to meet ongoing customer needs,” said the company. “The business will have a unique offering, being the market leader in Australia and New Zealand and the ability to supply from an extensive footprint in Asia."

 Growing opposition

However the planned takeover has been greeted with unease on a number of fronts.

Leading trade union Australian Manufacturing Workers Union (AMWU) said hundreds of jobs would be put at risk if the transaction were approved, and accused Amcor of seeking only to eliminate “a competitor rather than the acquisition of an asset to benefit the market.”

The Australian Competition and Consumer Commission (ACCC) has expressed fears that the deal would reduce competition in the Australasian market and potentially put Amcor in a strong position over material prices.

It said it currently believes “the proposed acquisition may substantially lessen competition for the supply of flexible packaging products in Australia”.

The body appeared sceptical of claims made by the parties that there was limited overlap in their operations, instead saying it considered “the proposed acquisition would remove Amcor’s main competitor” in the national market.

Its own review suggested “extensive overlap” with Amcor and Aperio thought to account for 95% of frozen food and personal care applications.

An ACCC statement also reported that some large volume FMCG customers of the companies had raised concerns the deal would lead to a reduction in competition, paving the way for possible price increases or cuts in innovation.

The body said it is scheduled to reach a final decision by 29 March.

 

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