Amcor to acquire Souza Cruz's tobacco packaging operations for $30million

Thursday, Apr 09, 2015

Australia’s packaging company Amcor will be acquiring the internal tobacco packaging operations of Souza Cruz in Brazil for $30m (BRL96m).

Majority-owned by British American Tobacco, Souza Cruz is considered to be one of the biggest players in the Brazilian cigarette market.

The current acquisition comes two weeks after Amcor agreed to acquire South African packaging company Nampak Flexibles for $22m (ZAR250m).

Amcor specialises in supplying rigid and flexible packaging products to industries including food, beverage, healthcare, home and personal care and tobacco packaging.

Amcor CEO and managing director, Ken MacKenzie said: "This acquisition is aligned with our strategic objective of growing our packaging business in Latin America. It represents an excellent opportunity to support an important global customer by extending access to Amcor's global innovation platforms and strong operational capabilities."

A long-term supply contract supports Amcor's investment that is conditional upon approval from the Brazilian Anti-trust Authority.

Based in Cachoeirinha, Rio Grande do Sul, Brazil, Souza Cruz is expected to achieve approximately $63m in annual sales. It markets more than 78 billion units of cigarettes every year through more than 260,000 retail stores and exports more than 127 tons of tobacco to around 50 countries.

Brazil accounts for 35% of Latin American cigarette consumption and is the 12th largest tobacco market in the world.

According to the Financial Review, Amcor has invested in 16 rigid plastics and flexible packaging units in the past four years that has reportedly delivered returns at or above its benchmark return on investment hurdle of 20%.

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