Rio Tinto sells Alcan Packaging units to Amcor

August 18, 2009

Amcor (Melbourne, Australia) is bidding to expand its sales by approximately $4.1 billion through the proposed acquisition of four Alcan Packaging (Paris) units from Rio Tinto (London). Amcor has offered Rio Tinto $2.025 billion for Alcan Packaging Global Pharmaceuticals, Alcan Packaging Food Europe, Alcan Packaging Food Asia, and Alcan Packaging Global Tobacco. Those businesses, which London-based mining interest Rio Tinto acquired as part of its $38.1 billion purchase of Canadian aluminum producer Alcan Inc. last July, generate $4.1 billion in sales and have 14,000 employees spread among 80 plants in 28 countries. Amcor, which itself generates $9.53 billion in sales from 226 operations in 34 countries with 21,000 employees, says the acquisitions reflect its focus on the strategic business areas of flexible packaging and folding-carton packaging.

This sale is the latest in a series of moves to spin off non-aluminum related businesses acquired as part of the Alcan purchase last year. On July 6, Rio Tinto announced that it had signed an agreement to sell its Alcan Packaging Food Americas division to Bemis Company Inc. for $1.2 billion, including as much as $200 million in Bemis shares.

Amcor reports being financially fit and able to take on such an acquisition after undergoing its “Way Forward” restructuring. “While these are difficult economic times globally, Amcor is in a solid financial position,” Amcor Managing Director and CEO Ken MacKenzie said in a release. “We made the tough decisions several years ago to reshape our company through focus and discipline.”

Amcor’s “Way Forward” was a three-year strategic plan outlined to shareholders in August 2005. As part of the program, the company conducted a portfolio review that resulted in asset sales of $1.25 billion. In addition to retiring debt and a share buyback, the proceeds from the asset sale were used to focus on what Amcor considers its key growth markets going forward, which include custom polyethylene terephthalate (PET) containers in the Americas; flexible and tobacco packaging in emerging markets; and beverage packaging in Australasia.

The acquisition is subject to regulatory approvals, as well as consultation with European Works Councils, and deal consummation isn’t expected for several months. Until the sale is finalized, both Amcor and Alcan Packaging will continue to operate as separately run companies. [email protected]

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