* Amcor to focus on core global plastics business
* To also keep cigarette packaging business
* Follows Brambles plan to spin off data management unit
By Jane Wardell
SYDNEY, Aug 1 Australia's Amcor Ltd
said it plans to list its glass and beverage can packaging unit,
a business valued at around $1.8 billion, so that it can better
focus on its core global business of plastics packaging.
The spin-off, slated for December, follows a similar plan by
Australian pellet supplier Brambles Ltd to float its $2
billion data management business.
The world's third-biggest packaging company stressed it had
businesses with very different product and geographical
segments, with the plastics packaging business deriving 95
percent of its sales outside Australia. Amcor will also retain
cigarette packaging, a big growth market in eastern Europe and
In contrast, the glass, beverage can and carton board
business, Australasia and Packaging Distribution (AAPD), garners
two thirds of its earnings from Australia and New Zealand. It
accounted for about 15 per cent of the company's profits before
interest and tax last financial year.
"Broadly speaking, it looks like a good move for
shareholders," said Ric Spooner, chief market analyst at CMC
Markets. "I think it does seem to be a situation where some of
the parts are ultimately worth more than the whole."
AAPD's 2012 earnings value the business at around A$2
billion ($1.8 billion) based on Amcor's overall market
capitalisation of A$13 billion.
Chief Executive Ken MacKenzie declined to comment on how
much the listing would be worth.
Amcor shares surged as much as 6 percent before losing some
of those gains in afternoon trade, when they were up 1.3 percent
"To us, the valuation uplifts or improvement is not
immediately obvious but Amcor is already pretty highly valued
given that its rallied so strongly particularly as a U.S. play
and an Aussie dollar play as well," said Martin Lakos, division
director at Macquarie Bank.
Analysts expect Amcor to post its fifth consecutive year of
double-digit profit growth in 2013 after lifting underlying net
profit by 5.7 per cent to A$322 million in the first half.
MacKenzie will remain the CEO and managing director of
Amcor. Nigel Garrard, the current president of AAPD will be
appointed CEO of the new company.
Asked about the impact of a slowing Australian economy on
the AAPD business, MacKenzie said it was "extremely
well-positioned to be sustainable in Australia", noting Amcor
has invested more than A$1 billion in the unit over the past six
years, including a new recycled paper mill in Sydney.
The plan will need to be approved by shareholders and Amcor
is expected to provide further details when it announces
full-year results on Aug. 19.