Amcor PLC (NYSE:AMCR) stock rose 1.06% (As on November 28, 8:00:00 AM UTC-4, Source: Google Finance) after the company was upgraded by equities researchers at Macquarie from a “neutral” rating to an “outperform” rating with an A$18 price target. Berry Global group inc has agreed to be acquired in an all-stock transaction by Amcor, with Amcor owning 63% of the new entity and Berry 37%. The Berry acquisition and related synergies give the firm confidence in Amcor seeing an 8% EPS compound annual growth rate to FY29, says the analyst, who adds that Amcor has a “good record on cost synergy delivery” and notes that the firm’s new forecasts do not yet include potential revenue synergies.
Meanwhile, AMCR and Berry Global have entered into a definitive merger agreement, pursuant to which Amcor and Berry will combine in an all-stock transaction. The combination brings together two highly complementary businesses to create a global leader in consumer packaging solutions, with a broader flexible film and converted film offering for customers, a scaled containers and closures business and a unique global healthcare portfolio. The combined company will have unprecedented innovation capabilities and scale, and be uniquely positioned to accelerate growth, solve customers’ and consumers’ sustainability needs, unlock portfolio transformation and deliver significant value to both sets of shareholders. The transaction has been unanimously approved by the boards of directors of both Amcor and Berry. Closing is targeted in the middle of calendar year 2025. Due to this deal, the company expects over 35% adjusted cash EPS accretion and expected double-digit return on investment and enhanced long-term shareholder value creation through sustained higher expected earnings growth from 10-15% to 13-18% per annum. There will be additional $280 million of one-time cash benefits from working capital efficiencies offsetting approximately $280 million of expected pre-tax costs to achieve synergies
Meanwhile, AMCR reported first quarter fiscal 2025 results that fell short of analyst expectations. The global packaging company posted adjusted earnings per share of $0.16, missing the consensus estimate of $0.17. Revenue came in at $3.35 billion, below analyst projections of $3.43 billion. The company reported volume growth of approximately 2% YoY, representing a sequential improvement of 1 percentage point compared to the previous quarter.
Despite the earnings miss, Amcor reaffirmed its full-year fiscal 2025 guidance, expecting adjusted EPS of $0.72 to $0.76. This outlook is in line with the current Wall Street consensus of $0.74 per share.