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Strategies & Market Trends : Speculating in Takeover Targets -- Ignore unavailable to you. Want to Upgrade?

To: richardred who wrote (4975)	8/5/2018 8:47:18 PM
From: richardred	2 Recommendations Recommended By Fuzzy Robert O Read Replies (1) \| Respond to of 7239

Amcor offers shares for Bemis, all eyes on synergies Amcor chief executive Ron Delia is set to front investors with his biggest move to date. Paul Jeffers by Sarah Thompson Anthony Macdonald Australia's large cap investors can keep their chequebooks in their top draws; Amcor is not planning to tap equity markets to fund its biggest ever acquisition. Which, the way fund managers see it, is expected to be a good thing. At about $US7 billion ($9.5 billion) including debt, takeover target Bemis Inc is both big and priced at more than 10-times EBITDA and 16-times profit, not cheap. So Amcor, advised by UBS and Moelis, is expected to offer its own scrip for Bemis in a deal that sources said was on track to be signed early this week. Back of the envelope calculations by one buy-side analyst on Sunday had Amcor likely to offer about 450 million of its own shares - or close to a 30 per cent stake - to buy Bemis. The deal is expected to be friendly, with both boards expected to tell shareholders that the tie-up is in their best interests. The scrip-heavy bid means the two sides, who know each other's business well, can sell merger benefits to their shareholder bases. As always investors will be looking for expected synergies. In particular, synergies are expected to be needed to sell the deal to Amcor shareholders who have kept a close eye on Goldman Sachs-advised Bemis over the past 12-months. Bemis has been on a mission to cut costs, ahead of a potential takeover. Amcor was first mentioned as a likely suitor last September, and sources said the talks had been on and off since. Amcor is trading at only a slight premium to Bemis (10.8-times forward EBITDA and 16.7-times profit) and while it is renowned as an experienced negotiator, there does not appear to be a lot of room to move on this, its biggest bet. Amcor is also expected to end up with a US-listing as part of the deal. It's something bankers have been trying to sell Amcor for years, asking it to follow the likes of Brambles and the big miners, and they'll finally get to see whether it drives any multiple upgrade. Should Amcor pull the trigger as expected, it would be the 13th of Australia's top 20 companies to announce a big M&A deal or plans for M&A in the past 12-months. It's the reason why investment banks have been kept busy on large transactions in 2018, even if their equity capital markets teams have been left wanting. afr.com