Amcor Ltd. (AMC) surged to its highest level since listing in 1968 as the world’s largest packaging company said it will spin off its Australian canning, bottling and carton business into a separate listed company.
The Australasia and Packaging Distribution unit, which had A$2.77 billion ($2.48 billion) in revenue last year, should be listed as a separate business by the end of December after routine court hearings and a shareholder vote, according to a company presentation.
The division, which makes wine bottles in South Australia state’s Barossa Valley as well as beer cans and corrugated boxes for food transport, has 36 plants and 78 distribution sites in seven countries, according to the presentation. First-half earnings before interest and tax at the unit fell 8 percent in the six months ended December, Amcor Chief Executive Officer Ken MacKenzie said in an investor call in February.
“Although Amcor and AAPD are both packaging companies they are actually very different in terms of product segments and geographic focus,” MacKenzie said in a statement today.
Amcor shares rose as much as 5.5 percent and were up 4.7 percent at A$11.09 at 10:24 a.m. in Sydney, heading for the highest closing level since the company listed in 1968. The benchmark S&P/ASX 200 index climbed 0.4 percent.
The corrugated cartons and beverages business was little changed in the first half from a year earlier, while rising raw materials costs meant profits fell in the distribution business, Mackenzie said in February.
Packaging companies in developed countries with revenues of more than $1 billion are worth on average about 0.8 times their sales, according to data compiled by Bloomberg. That multiple would give Amcor’s spun-off unit a value of about A$2.22 billion, according to data compiled by Bloomberg.
The unit will have its current President Nigel Garrard as chief executive officer and Amcor board member Chris Roberts as chairman, the Melbourne-based company said in a regulatory statement.
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