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Is creating the biggest packaging company worth the $7b price?

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15.04.2019

With the shareholder vote looming on Australia’s biggest packaging deal to date - Amcor’s takeover of US-based Bemis - the research team from CLSA has raised a red flag about the conventional wisdom of the $7 billion union.

Under the stewardship of former chief executive Ken MacKenzie, Amcor's success was in large part due to its underlying and obsessive discipline around return on capital.

One wonders what Ken MacKenzie, who now chairs BHP and is equally focused on its capital returns, would make of the Bemis takeover.Credit:Bloomberg

It was the reason Amcor traded at a premium to its peers, why MacKenzie became the pin-up chief executive for Australian investors and why Amcor was our sharemarket darling among the larger companies on the ASX.

One wonders what MacKenzie, who now chairs BHP and is equally focused on its capital returns, would make of the Bemis takeover, from which Amcor will emerge as the largest packaging player in the world.

Having scoured through 300 pages of acquisition documents, released last month, CLSA’s Richard Johnson says a different picture emerges about Amcor’s growth profile.

He says the scheme document highlights the extent to which acquiring Bemis will dilute Amcor’s........

© Brisbane Times