Danisco has agreed to merge its Flexible Packaging Division with the European flexible packaging activities of Amcor and of AB Akerlund & Rausing, part of A. Ahlstrom Corporation.
The Joint Venture, which is subject to the approval of the European Union and other required regulatory approvals, will create the largest producer of flexible packaging in Europe, with estimated sales of EUR 1,100 million (DKK 8,000 million).
According to the company, the joint venture will benefit from greater plant focus, improved raw material purchasing, re-structured corporate and sales organisations and increased leverage from R&D spending.
As part of the Joint Venture, Danisco will receive an initial cash payment of up to EUR 242 million (DKK 1,800 million) from Amcor, an earn-out of up to approx. EUR 100 million (DKK 750 million) linked to the future profitability of the Joint Venture, and 25 per cent of the share capital of the Joint Venture with initial value of EUR 61 million (DKK 450 million).
Amcor will own 67 per cent of the Joint Venture and Ahlstrom 8 per cent. Through its continuing equity participation in the Joint Venture, Danisco will share in the earnings potential of the Joint Venture.
Danisco and Amcor have entered into put and call arrangements under which Danisco may sell its interest in the Joint Venture and Amcor may purchase Danisco’s interest in years 2 through 4 after the formation of the Joint Venture, based on a multiple of 6 times the Joint Venture’s earnings before interest, tax, depreciation and amortisation.
In the 12 months to the end of January 2001, Danisco Flexible reported earnings (EBITA) of EUR 8 million (DKK 60 million) and sales of EUR 595 million (DKK 4,400 million). The book value of Danisco Flexible is approximately EUR 415 million (DKK 3,100 million).