Amcor and Bemis bidding for Alcan pack division: reports

According to reports, Australian group Amcor and US firm Bemis are among the bidders for the packaging division of the Anglo-Australian mining giant.

Private equity firms Apollo Global Management and Bain Capital are also thought to be in the running for the division in an auction which is understood to be organised by bank Morgan Stanley, Reuters reported.

Rio Tinto Alcan put the division up for sale following Rio Tinto’s £19bn takeover of Alcan last year. The group is aiming to recoup around £7.5bn in asset sales this year in a bid to cut the debt for that sale. A figure of $6bn has been suggested as the likely price for the division.

Apollo already has packaging interests, owning rigid plastics group Berry Plastics and Covalence Speciality Materials, the former Tyco Plastics business. It merged the two groups in March 2007.

M&A expert Nicholas Mockett of private equity firm Europa Partners said that there would be synergies were Apollo to buy the group, but said that both Amcor and Bemis would be likely to only be interested in the flexible packaging parts of Alcan’s packaging operations.

He added that the current credit climate may put a damper on any sale, especially if Rio Tinto was unable to get the price it wanted for the business. ”The acquisition of Alcan was at a multiple [of EBITDA] that would exceed the levels in a packaging industry transaction, so Rio Tinto would need to get a good price to make the deal earnings enhancing,” he said.

Rio Tinto itself last month said that it may put the sale on hold due to the current poor credit conditions for any potential buyers.

Rio Tinto’s chief financial officer Guy Elliott has also hinted that the group would be more likely to keep the division than sell it at a cut-down price. Last month, he told investors that there was a long list of buyers for all the assets up for sale, but added: “In all of our divestments we are determined that we will only enter into a transaction at the right price. Value remains our primary consideration.”

Alcan Packaging has sales of around £3bn per year and employs 31,000 staff in 129 locations. It provides plastic, aluminium, paper, paperboard and glass packaging to the food and beverage, pharmaceutical and medical, beauty and tobacco industries. Food and drinks account for almost two-thirds of sales.

The firm has five UK plants providing packaging to a number of blue-chip clients, including PepsiCo, Nestlé and Walkers.

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