Amcor plc AMCR announced that it entered a definitive merger agreement with Berry Global Group, Inc. BERY. This deal boosts AMCR’s growth strategy by focusing the company's portfolio on faster growing, better margin categories.

Benefits of Amcor-Berry Global Deal

The deal will bring together two highly complementary businesses, combining Amcor's global flexibles and regional containers businesses with Berry Global's  regional flexibles, and global containers and closures businesses. It will create a global leader in consumer packaging solutions with remarkable innovation capabilities and scale.

Customers will get a broader flexible film and converted film offering, as well as more sustainable solutions that promote circularity and reduce carbon footprint. The merged company will have a scaled containers and closures business, and a unique global healthcare portfolio. 

Amcor will have a strengthened position in high-growth, high-value categories, including Healthcare, Protein, Pet Food, Liquids, Beauty &  Personal Care, and Food Service. 

Amcor currently estimates $650 million in benefits from identified costs, growth and financial synergies by the end of the third year of closing. The companies expect additional $280 million of one-time cash benefits from working capital efficiencies, which will offset around $280 million of expected pre-tax costs to achieve synergies. 

AMCR anticipates net leverage of 3.3X at the closure of the transaction, with a path to de-leverage below 3.0X during the first full year.

Financial Details of AMCR’s Merger Deal With Berry Global

Berry Global’s shareholders will receive 7.25 Amcor shares for each BERY share held upon closing. 

AMCR will hold approximately 63% of the combined company, whereas Berry Global will own 37%. 

The companies will have combined revenues of $24 billion and adjusted EBITDA of $4.3 billion. The combined entity will service customers in more than 140 countries through around 400 production facilities.

The transaction is expected to close in the middle of calendar year  2025, subject to closing approvals.

Amcor’s Share Price Performance

In the past year, AMCR shares have gained 11.1% compared with the industry’s 25.3% growth.

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AMCR’s Zacks Rank & Stocks to Consider

The company currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the Industrial Products sector are Federal Signal Corporation FSS and RBC Bearings Incorporated RBC. Both these companies have a Zacks Rank #2 (Buy) at present. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Federal Signal has an average trailing four-quarter earnings surprise of 11.8%. The Zacks Consensus Estimate for FSS’s 2024 earnings is pinned at $3.34 per share, which indicates year-over-year growth of 29.5%. The company’s shares have gained 30.4% in a year.

The Zacks Consensus Estimate for RBC Bearings’ fiscal 2025 earnings is pegged at $9.80 per share. The company has a trailing four-quarter average earnings surprise of 2.5%. RBC shares have gained 33.8% in a year.

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