UPDATED: Rio Tinto sells Alcan Food Packaging Americas to Bemis

Alcan Food Packaging Americas consists of 23 flexible packaging plants across the continent and New Zealand serving the food and drink industries and generating $1.5bn in net sales in 2008, some 23% of Alcan Packaging’s total revenue.

Lansdowne Capital packaging analyst Tim Rothwell said the acquisition was a logical move for Bemis to take. “The majority of Bemis’s turnover is in North America, and while buying the European flexible packaging business would have been logical, it’s not as attractive as North America where they are market leader.

Nicholas Mockett, partner at Europa Partners, said it was a fairly good price from Rio Tinto’s perspective, and Bemis was well placed to extract synergies from the Alcan plants.

Australian packaging group Amcor is said to still be in talks to buy part of Alcan Packaging, according to news agency Reuters. In February, Amcor revealed it was in confidential discussions with mining giant Rio Tinto over a possible sale.

Mockett suggested the Bemis deal might make it easier for Amcor to acquire the European operation. “It perhaps clears the way for another deal to be done and gives Amcor a freer run.”

Lansdowne’s Rothwell said he remained sceptical about Amcor’s financial ability to close a deal and did not fit with the rationalisation strategy. “They’ve been closing European plants and it’s very difficult to then buy more plants.”

Bemis president and chief executive Henry Thiesen described the acquisition as a prudent investment in the firm’s future.

“The combined companies are expected to generate cashflow sufficient to rapidly reduce debt outstanding while maintaining our combined portfolio of world class manufacturing facilities, investing in growth opportunities and supporting Bemis’s historic dividend policy.”

The acquisition is expected to boost Bemis’ sales by 40%, and will be funded by a mixture of $1bn debt and $200m in shares.

Rio Tinto chief financial officer Guy Elliot said the sale was the first significant step in reducing the Alcan asset portfolio. “The transaction represents solid value given the challenging financial environment,” he said.

Rio Tinto has been looking to sell the packaging division since acquiring Alcan in 2007 and admitted in April it was considering breaking the business up to achieve a sale.

Bemis confirmed it was in talks with Rio Tinto over buying part of the business later the same month. Barclays Capital and Greenhill & Co are acting as financial advisors to Bemis and Baker & McKenzie is the main legal advisor.

Alcan Food Packaging Americas supplies single and multi-layer, plain and printed high-barrier plastic films, laminations, pouches, bags, lidstock and thermoformed trays for the food, beverage, meat and dairy industries.

ALCAN FOOD PACKAGING AMERICAS
Net Sales 2008 $1.5bn
EBITDA $166m
Staff 4,600
Headquarters Chicago
Plants 23
Locations Argentina, Brazil, Canada, Mexico, New Zealand, US

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