7 July 2009
Bemis deals for Rio Tinto packaging unit
In a move to become a more dominant player on the global scene, plastic packaging maker Bemis Co. will pay $1.2 billion in cash and stock for the U.S. packaging business of Rio Tinto PLC.
The acquisition boosts Bemis’ share of the global food packaging market from 57% to 70%.
The deal for the entity known as Alcan Packaging Food Americas includes 23 facilities in the U.S., Canada, Mexico, Brazil, Argentina, and New Zealand, Bemis officials said.
Bemis, which reported a total debt of $617.4 million at the end of the first quarter, said it will borrow $1 billion and issue $200 million in stock. The Neenah, Wisc., food and beverage packager had about 103.3 million shares outstanding.
Chicago-based Alcan Packaging, which had 2008 net sales of $1.5 billion, will start increasing earnings next year, said Bemis, which expects its current payroll of about 20,000 to grow by 4,600.
Anglo-Australia miner Rio-Tinto said it sold Alcan Packaging to cut its $23.9 billion debt, much of which it incurred in 2007 when it bought Canadian aluminum giant Alcan Inc. for $38 billion.
Bemis said the acquisition will boost net sales by 40% to $5.3 billion.
As always in this kind of deal, the word synergy is coming into to play, which means layoffs are likely, as the company said it expects to save $65 million.
Pending regulatory approvals, the deal is set to close late this year.
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