Australian packaging company Amcor has announced an agreement to acquire Jiangsu Shenda Group's flexible packaging operations for CNY350m ($57m).
Two thirds of the acquired sales cater to the pharmaceutical, snacks and culinary end markets. Following the acquisition, Amcor will be market leader in both film manufacturing and conversion in eastern China, which represents about 40% of China's gross domestic product.
Jiangsu Shenda has two plants in the Jiangsu province, which fits well with Amcor's existing plant in the province and offers considerable synergy opportunities.
Amcor will be able to split overheads, optimise production across the sites and bring operating improvements through the sharing of best practice. Cost benefits of more than 5% of sales are expected to be delivered through these opportunities.
Amcor managing director and CEO Ken MacKenzie said that the company is positioned well in the Chinese flexible packaging market with sales of over A$400m ($368m).
"Continued strong growth in consumer spending makes China one of the most attractive markets globally," he added.
Subject to regulatory and other conditions, the deal is expected to close in the coming months.