Amcor (AMC) will purchase Indonesian flexible packaging business Bella Prima at a cost of $27 million, which represents seven times the target's calendar 2013 earnings before interest, taxation, depreciation and amortisation (EBITDA).
Bella Prima has two plants in Jakarta specialising in the high growth shrink sleeve, label and lidding business, which delivered sales of approximately $30 million in calendar 2013.
Amcor said the acquisition is complementary to its existing operations in Indonesia as it broadens the group’s participation strategy with its multinational and local customers as well as adding to the local talent pool.
Amcor chief executive Ken MacKenzie said Indonesia is an attractive market for flexible packaging given its rising per capita income and changing retail formats.
"The Bella Prima acquisition gives Amcor the opportunity to broaden its product portfolio in attractive end market segments and deepen our relationships with key customers," he said.
"Given the expected synergy benefits, it is anticipated returns will exceed 20 per cent by year three."