Australian firm Amcor announced a $6.8 billion buyout of US rival Bemis Tuesday to become the world's largest plastic packaging group, and will shift its primary listing to the New York Stock Exchange.
Amcor will issue 5.1 of its shares for each Bemis share under the deal, in a transaction that will see Bemis stockholders owning 29 percent of the combined company and Amcor the rest.
It represents a 25 percent premium to Bemis' closing price of $46.31 on August 2.
The new entity, which will have combined revenues of US$13 billion, will have a main listing on the New York Stock Exchange and is expected to be included in the S&P 500. It will also remain listed in Australia.
Chief executive Ron Delia said Amcor's biggest ever acquisition would give it a stronger foothold in the North American and Brazilian markets and made sense in an industry undergoing consolidation.
"The strategic rationale for this combination and the financial benefits are highly compelling for both Amcor and Bemis shareholders," he said in a statement, adding that there would be significant cost savings.
"Amcor identified flexible packaging in the Americas as a key growth priority and this transaction delivers a step change in that region."
He said there was an increasing number of opportunities to capitalise on shifting consumer needs and the demand for more responsible packaging solutions that protect the environment.
Amcor shares dropped more than four percent to Aus$14.52 ($10.73) in morning trading in Sydney as investors digested the news.
Bemis chief executive William F. Austen said he was thrilled by the opportunities the merger offered and noted the common features of both firms, including histories that date back more than 150 years.
"The combination of Bemis and Amcor is transformational, bringing together two highly complementary organisations to create a global leader in consumer packaging," he said.
"We believe this combination, which is an exciting growth story for both companies, will benefit all stakeholders.
- Industry consolidates -
Amcor produces rigid and flexible packaging for food, beverage, pharmaceutical, medical, home, personal care and other products, operating in 40 countries with more than $9 billion in sales annually.
It has been on a growth drive in recent years, with several smaller-scale acquisitions, including Alusa, the largest flexible packaging business in South America, and Chinese firm Qite.
The packaging industry itself has also been consolidating, with a host of mergers and acquisitions as companies seek scale and cost savings.
It has seen Ireland's Smurfit Kappa recently agree to buy Dutch-based Reparenco and Britain's DS Smith acquire Spanish rival Europac.
Bemis, which was established in 1858 and is headquartered in Wisconsin, operates in a similar vein to Amcor but on a smaller scale, generating US$4 billion in sales last year, most of it from the United States.
Its customers include major conglomerates such as Kraft-Heinz, Proctor & Gamble and Kimberly-Clark.
The deal is expected to be concluded in the first quarter of next year with Bemis directors getting three seats on Amcor's 11-person board.
Amcor will have a primary listing on the New York Stock Exchange, but will remain listed in Australia