Global packaging company Amcor has secured approval from the Australian Competition and Consumer Commission (ACCC) to acquire Aperio Group in Australia for $238m.
ACCC had previously expressed concern over the deal, saying that it would reduce the choice of supply of value-added flexible packaging, but now announced that the deal would not result in substantial lessening of competition in any market.
The deal is expected to see the company generating a turnover of about $1.2bn yearly in flexible packaging across Asia Pacific.
Amcor said the merged entity will control up to 95% of everyday household items packaging including baby care, personal grooming, food packaging including frozen foods, and control about 30% of the flexible packaging market in Australia.
ACCC chairman Rod Sims said that while taking a decision the company considered that there will be a number of competitors to Amcor, particularly overseas manufacturers of flexible packaging as the packaging is easy to transport and its import levels are increasing.
"Some overseas suppliers offer Australian warehouse and distribution services to better compete with domestic suppliers," Sims said
Amcor managing director Ken MacKenzie said the integrated business is expected to deliver an improved product and service to customers.
The packaging giant estimates that net synergy benefits and net cash cost to achieve the synergies will be about A$25m ($26m).
The purchase is expected to deliver more than 20% return on investment by the third year after the acquisition, including capital spending synergies.
Scheduled to conclude in June 2012, the deal is set to add 13 sites across Australia, New Zealand and Thailand to the existing 21 sites of Amcor's Flexibles Asia Pacific Business Group.
Image: The Amcor-Aperio deal is expected to see the company generating a turnover of about $1.2bn yearly in flexible packaging across Asia Pacific. Photo: Amcor