Analyst: Berry Global (BEY.US) shareholders will accept Amcor (AMCR.US) takeover offer despite lower premium

Barclays analysts said that while a 10% premium may be considered too low, Berry Global Group (BEY.US) shareholders may accept Amcor Plc's (AMCR.US) $8.4 billion all-stock deal to merge the two packaging companies. Michael leihead, an analyst at Barclays, wrote in a report on Tuesday: "Most of the transaction value comes from strategic synergies, and we don't think there will be another plastic packaging company large enough to make a competitive or better offer, and we don't think financial buyers can get higher value without strategic synergies." Packaging solutions company Amcor agreed to buy Berry Global Group in an all-stock deal on Tuesday, in which Berry's shareholders will receive 7.25 shares of Amcor for each share of Berry, at a price of $73.59 per share, a 10% premium to the closing price on Monday. The statement said that Amcor's shareholders will hold about 63% of the combined company, and the combined company's revenue will be $24 billion. In addition, leihead wrote that Berry's shareholders may think it will be a "long and hard road" to reject the offer and try to convince the market that Berry "can achieve better growth and valuation independently." Jefferies also believes that the deal may win shareholder support. Philip Ng, an analyst at Jefferies, wrote in a report on Tuesday: "Both companies need shareholder approval, but we don't expect much resistance as the market reacted relatively mildly to the news. We are still digesting the merits of the combination, which is a surprise to us as we were hoping to see a cash component and a larger premium (about 10%)." leihead said that the review process of the transaction may take longer than expected until mid-2025. He gave Berry a "Hold" rating and a target price of $64. The Barclays analyst believes that there is "a fair amount of overlap" between soft and hard plastic packaging, which may lead to antitrust review and/or modest divestiture plans.