AMCCD Amcor Limited

By Dana Mattioli and Ben Dummett 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (August 4, 2018).

Amcor Ltd. is in advanced talks to acquire packaging rival Bemis Co., according to people familiar with the matter.

Terms of the potential deal couldn't be learned, but Bemis, based in Neenah, Wis., had a market value of $4.2 billion at the start of trading Friday. Given a typical takeover premium, an acquisition could value the company at more than $5 billion.

Amcor and Bemis could announce a deal next week assuming the talks don't fall apart at the last minute, the people said.

Bemis shares soared Friday after The Wall Street Journal reported on the possible deal, closing up 11% at $51.53.

Bemis, which was founded in 1858, makes flexible packaging for health-care companies and consumer-goods providers like Kraft Heinz Co. Globally, it employs around 16,000. Amcor makes packaging and wrapping for products such as disposable drinks and condiments. It has a market value equivalent to about $13 billion. The company has its corporate headquarters in Zurich and head office in Australia.

Bemis has about $1.5 billion of debt and registered more than $4 billion in sales last year. With major consumer-goods companies grappling with slumping demand as tastes change, Bemis and other packaging providers have struggled to boost sales. Bemis last year eliminated jobs and closed manufacturing sites.

The company had been under pressure from activist investor Starboard Value LP to boost profits before the two sides reached an agreement over the appointment of four independent directors in March.

Bemis has been showing signs of turnaround. Last month, it reported adjusted earnings for the second quarter rose 42% from a year earlier, benefiting from cost-cutting and other measures to improve its operations. Bemis's stock price jumped 6.2% on the results. Still, the stock has for years underperformed its peer group.

Amcor generated sales of $9.1 billion last year servicing sectors ranging from food and beverages to pet care. The company, whose founding dates back to the 1860s, has grown into a global packaging giant employing more than 35,000. By acquiring Bemis, Amcor could bolster its offerings of so-called rigid plastic packaging. That business represents about 32% of Amcor's total sales, compared with 68% for its operation making flexible packaging products.

The talks come as Eastman Kodak Co. is exploring a sale of its flexible packaging division and further underscore the broader pressure for the packaging sector to consolidate. Rochester, N.Y.-based Kodak is in the early stages of a sales process that could value the division at more than $400 million.

Write to Dana Mattioli at dana.mattioli@wsj.com and Ben Dummett at ben.dummett@wsj.com

(END) Dow Jones Newswires

August 04, 2018 02:47 ET (06:47 GMT)

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