Morningstar | Corporate Action: Recommend Vote in Favour of Scheme of Arrangement To Combine Amcor and Bemis
We recommend that shareholders of narrow-moat Amcor vote in favour of the scheme of arrangement to effect its combination with narrow-moat Bemis Co. The scheme will create a new holding company, Amcor plc, or New Amcor, which will be used to combine the two companies. Both Amcor and Bemis shareholders will vote on May 2, 2019 to bring the two companies together. We continue to see the merits of the combination, outlined in our note dated Aug. 7, 2018, and expect both sides to approve the deal. We estimate the transaction will result in USD 126 million in synergy benefits. These synergies contribute AUD 1.14 per share of value to our unchanged AUD 14.60 per share Amcor valuation.If approved, Amcor and Bemis shareholders will exchange their existing shares for a fixed number of New Amcor shares. Post approval, New Amcor will own all assets of both companies. Amcor shareholders will receive one New Amcor share for each Amcor share they own. While New Amcor’s primary listing will be on the New York Stock Exchange, we anticipate liquidity for Australian shareholders will remain on the Australian Securities Exchange, or ASX. Australian shareholders will receive one New Amcor CHESS Depository Interest, or CDI, for each Amcor share they own. New Amcor CDIs will subsequently trade on the ASX.
Amcor is a packaging company. Co. has the following reportable segments: Amcor Rigid Plastics, which manufactures rigid plastic containers for a range of primarily beverage and food products; Amcor Flexibles, which represents the aggregation of four operating segments of which each manufactures flexible and film packaging for their respective industries; as well as Other/Investments, which holds Co.'s equity accounted investments in the associate AMVIG Holdings Limited (AMVIG) and the joint venture Discma AG (Discma). AMVIG is mainly involved in the manufacture of tobacco packaging while Discma's operations primarily relate to the development and licensing of packaging product development.
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