Amcor completes previously announced sale of BCNA joint venture interest for $122 million; Proceeds used to reduce debt

Rhea-AI Summary

Amcor (NYSE: AMCR) has completed the sale of its 50% stake in Bericap North America (BCNA) for $122 million on December 27. The proceeds will be used to reduce the company's debt. The joint venture reported fiscal 2024 total sales of approximately $190 million and adjusted EBIT of $19 million, which were previously consolidated under Amcor's Rigid Packaging business. Amcor's attributable adjusted net income from BCNA for fiscal 2024 was approximately $8 million. The company stated that, after accounting for reduced interest expenses, the transaction is not expected to impact its fiscal 2025 financial outlook.

Positive

• Received $122 million in cash proceeds from sale
• Debt reduction from sale proceeds improves balance sheet
• No negative impact expected on FY2025 financial outlook

Negative

• Loss of $190 million in consolidated annual sales
• Loss of $19 million in adjusted EBIT contribution
• Reduction of $8 million in adjusted net income

Insights

Financial Analyst

The sale of Amcor's 50% stake in BCNA for $122 million represents a strategic move to optimize their balance sheet. The transaction multiple of approximately 6.4x EBIT ($122 million for a business generating $19 million in EBIT) appears reasonable for the packaging industry. With $190 million in annual sales and $8 million in adjusted net income, BCNA was a relatively small contributor to Amcor's overall operations. The debt reduction focus aligns with prudent financial management, particularly in a high interest rate environment. While the immediate earnings impact is neutral due to interest expense savings offsetting the lost income, this transaction strengthens Amcor's financial flexibility and could potentially support future strategic initiatives or shareholder returns.

For retail investors, it's worth noting that this type of non-core asset divestiture, while not transformative, demonstrates management's commitment to portfolio optimization and capital allocation discipline. The neutral impact on fiscal 2025 outlook suggests the transaction was well-priced and thoughtfully structured.

Market Research Analyst

This divestiture reflects broader industry trends where packaging companies are streamlining their portfolios to focus on core competencies and maintain financial agility. The BCNA joint venture, primarily focused on closure solutions, represented a non-strategic holding for Amcor's broader packaging portfolio.

The timing of this sale is particularly strategic given the current market dynamics:

• Interest rates remain elevated, making debt reduction an attractive use of proceeds
• The packaging industry is experiencing consolidation, creating opportunities for strategic divestitures
• Operational focus is increasingly important in managing supply chain and cost pressures

The neutral outlook impact suggests this move is more about strategic positioning than immediate financial gains, potentially setting the stage for more focused investment in growth areas or additional portfolio optimization initiatives.

ZURICH, Dec. 30, 2024 /PRNewswire/ -- Amcor (NYSE: AMCR, ASX: AMC), a global leader in developing and producing responsible packaging solutions, announced today it completed the sale of its 50% interest in Bericap North America (BCNA) for $122 million on December 27, with the proceeds used to reduce debt.

Fiscal 2024 total sales for the joint venture were approximately $190 million and adjusted EBIT was approximately $19 million, both of which were previously fully consolidated under Amcor's Rigid Packaging business. Adjusted net income attributable to Amcor for fiscal 2024 was approximately $8 million. Net of the resulting reduction in interest expense, the transaction is not expected to have an impact on Amcor's financial outlook for fiscal 2025.  

About Amcor

Amcor is a global leader in developing and producing responsible packaging solutions across a variety of materials for food, beverage, pharmaceutical, medical, home and personal-care, and other products. Amcor works with leading companies around the world to protect products, differentiate brands, and improve supply chains. The Company offers a range of innovative, differentiating flexible and rigid packaging, specialty cartons, closures and services. The company is focused on making packaging that is increasingly recyclable, reusable, lighter weight and made using an increasing amount of recycled content. In fiscal year 2024, 41,000 Amcor people generated $13.6 billion in annual sales from operations that span 212 locations in 40 countries. NYSE: AMCR; ASX: AMC 
www.amcor.com I LinkedIn I YouTube

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SOURCE Amcor

FAQ

How much did Amcor (AMCR) sell its Bericap North America stake for?

Amcor sold its 50% stake in Bericap North America for $122 million on December 27, 2024.

What will Amcor (AMCR) do with the proceeds from the BCNA sale?

Amcor will use the $122 million proceeds from the BCNA sale to reduce its debt.

What was BCNA's contribution to Amcor's (AMCR) financial performance in FY2024?

BCNA contributed approximately $190 million in sales, $19 million in adjusted EBIT, and $8 million in adjusted net income to Amcor in fiscal 2024.

How will the BCNA sale impact Amcor's (AMCR) FY2025 outlook?

The sale is not expected to impact Amcor's fiscal 2025 financial outlook after accounting for the reduction in interest expense.