Australia | Jun 23 2006
By Rudi Filapek-Vandyck
It’s the kind of stuff you would expect at times like these. The share price of troubled packaging giant Amcor (AMC) has been yo-yo-ing between $6.50 and $7.50 over the past years as management has had to fight one bad news offensive after the other one, and because overall market forces have been working to the disadvantage of the company’s bottom line.
Now the share price is back at $6.80 (it has been lower recently) and rumours are circling around about corporate interest. Are we talking private equity suppliers? The Australian’s journalist Michael West throws in well known New Zealand corporate doctor Graeme Hart.
Hart’s interest should come naturally. He is cashed up after a highly successful Goodman Fielder-Burns Philp strategy and he has just acquired Amcor’s NZ competitor Carter Holt Harvey.
According to the story, as put forward by West in today’s newspaper, Carter Holt Harvey’s lining board plant in New Zealand is having a rough time, its margins under severe pressure by low-cost competitors in Asia. If however Hart could allow it to combine with Amcor’s corrugated-box operations, we would be talking a different scale and thus better chances to turn the business around. West: "We’re talking synergy gains of $300 million-plus".
We have yet to spot the first securities analyst who throws in his five cents about the issue, but one look at the FN Arena database of ten leading equity advisers in Australia confirms that, from a fundamental perspective, Amcor generates low interest, if any.
JP Morgan ceased coverage in January and still has to re-initiate. The others rate it six times Neutral (safe) and two times Sell. Aspect Huntley stands out with an Accumulate rating.
Most price targets are above $7.00. Maybe Graeme Hart speculation can make the shares close the gap faster than expected.
Amcor has appointed investment bankers to advise on its restructuring and possible asset sales.