Bemis Acquires Alcan Division for $1.2 Billion

123jump.com Staff
06 Jul, 2009
New York City

Bemis agreed to acquire flexible packaging division of Alcan controlled by Rio Tinto. Bemis will pay $1.2 billion of which $1 billion is in cash and $200 million is in company stock.

[R]10:45 AM New York – Bemis agreed to acquire flexible packaging division of Alcan controlled by Rio Tinto. Bemis will pay $1.2 billion of which $1 billion is in cash and $200 million is in company stock.[/R]

Rio Tinto sold its American packaging division to Bemis for $1.2 billion to lower its debt. Rio acquired the food packaging division as a part of its 2007 purchase of Canadian aluminum maker Alcan for $38 billion.

Bemis Company, Inc ((BMS)) will pay $1 billion in cash and $200 million equity.

Rio Tinto ((RTP)) recently completed $15.2 billion in rights offering and has sold several businesses to lower its total debt of $39 billion. The company is scheduled to repay $8.9 billion in August.

Bemis will acquire 23 flexible packaging plants in the U.S., Canada, Mexico, Brazil, Argentina and New Zealand.

The food packaging division in 2008 reported sale of $1.5 billion, sharply lower that its peak sale of $6 billion and adjusted operating earnings of $166 million. Bemis with revenue of $3.5 billion is expecting synergy of $65 million and values the transaction after adjusting for the synergy and tax benefits at 4.8 times earnings.

Bemis'' pro forma 2008 net sales after the transaction will jump 40% to approximately $5.3 billion with the food packaging division share increasing to 70% from 57% of total sales.

Barclays Capital and Greenhill & Company acted as financial advisor to Bemis.