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Amcor announces demerging of packaging business

August 2, 2013 • News

Australian packaging giant Amcor has announced that it plans to list its glass and beverage can packaging unit into a separate entity in order to better focus on its core business of plastic packaging.

Image courtesy of mrpuen / FreeDigitalPhotos.net

Image courtesy of mrpuen / FreeDigitalPhotos.net 

According to Reuters the planned spinoff of the Australasia and Packaging Distribution (AAPD), which has earned around A$2 billion last year, is slated for December and follows a similar move made by pellet supplier Brambles, which announced its demerger last month.

Following the demerger which is subject to a shareholder vote, both Amcor and the new company will be listed on the Australian Stock Exchange.

Chief Executive Ken MacKenzie will remain as the CEO and Managing Director of Amcor while Graeme Liebelt will be chairman. Meanwhile Nigel Garrard, the current president of AAPD will be appointed CEO of the new company while Chris Roberts will be assuming role as chairman.

“To be a successful market leader, that delivers continuous improvement in customer value, a company must be focused in terms of product portfolio and end markets,” says Mackenzie on the company’s media release.

He says although both businesses are engaged in packaging, they are actually very different in product segments and geographic focus. The plastics packaging business derives 95 percent of its sales from outside Australia, while AAPD garners two-thirds of its sales from the country and New Zealand.

Mackenzie says the glass, beverage can and carton board business is “extremely well-positioned to be sustainable in Australia” despite the impact of the struggling Australian economy. He adds that Amcor has invested more than a billion dollars in the unit over the past six years.

“Over the past six years, Amcor has invested significantly in AAPD to improve its manufacturing capabilities and ensure it is well positioned for growth. These investments have been in excess of $1 billion over that period and include the new recycled paper mill at Botany, a new furnace at the glass bottle plant at Gawler and a new beverage can line in New Zealand. AAPD will continue to benefit from these initiatives in terms of earnings and cash flow.”

Mackenzie declined to comment on how much the listing is worth but analysts are positive about the demerging announcement.

“Broadly speaking, it looks like a good move for shareholders,” said Ric Spooner, chief market analyst at CMC Markets, quoted in the Reuters report. “I think it does seem to be a situation where some of the parts are ultimately worth more than the whole.”

More details about the decision are expected to be announced during the presentation of the full-year results on August 19.

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