Orora shares jump on North American divestment
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More news: Shares in Orora rose 5.2% to $2.63 amid a weak Australian market after the packaging major announced a deal to divest its North American packaging solutions business for $1.78 billion.
The company said the deal would leave it with a strong balance sheet and provide flexibility to pursue value accretive organic growth opportunities. It also announced it would bring forward a $130 million investment to expand its cans capacity by 30% and prioritise reducing debt from the proceeds.
Orora sells North American packaging arm for $1.78 billion
The news: Orora has agreed to sell its North American packaging solutions business to private equity-backed rival Veritev.
The numbers: It will sell the Orora Packaging Solutions (OPS) business for $1.78 billion on a cash and debt-free basis.
The deal is expected to result in net cash proceeds of approximately $1.69 billion after tax, transaction costs and purchase price adjustments, the company said.
The context: The deal comes just weeks after Orora flagged discussions to divest the North American business following a strategic review of OPS with the objective of unlocking value for shareholders.
The sale transforms Orora into a focused beverage packaging business, with market-leading positions and a defensive growth profile across beverage substrates and end-markets. It also leaves Orora with a strong balance sheet, providing flexibility to pursue value accretive organic growth opportunities, the company told investors.
It plans to bring forward a $130 million investment in Rocklea, Queensland facility that will expand its cans capacity by 30%. The company said it will prioritise reducing debt and intends to distribute surplus proceeds from the transaction to shareholders over time in a tax efficient manner.
The source: ASX announcement
