Amcor managing director Ken MacKenzie says the company will increase its exposure to the Chinese tobacco packaging market
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Amcor has entered into an agreement with the Hong Kong publicly listed company, Vision Grande Group Holdings Limited, to sell its two tobacco packaging operations in Beijing and Qingdao, China. The consideration for the sale is 121.1 million Vision Grande shares and represents a valuation of HK$509m on an assumed share price for the issued shares of HK$4.20 per share.Vision Grande has also agreed to allot and issue 16.67 million new shares at a subscription price of HK$4.20 per share to Amcor.
In view of this transaction, Amcor did not exercise its existing option to purchase 96 million shares at HK$2.50 per share, which expired on December 31, 2005.
Instead, Vision Grande and Amcor have entered into a new agreement under which Vision Grande has agreed to allot and issue a further 96 million shares at a subscription price of HK$2.50 per share, in order to supersede the previous option and bundle it together with the sale of the Chinese tobacco packaging operations and the new subscription. Completion of all three transactions will take place at the same time.
Amcor managing director, Ken MacKenzie, says Amcor has a strategic objective to increase its exposure to the Chinese tobacco packaging market.
“Our initial investment in Vision Grande was designed to build our relationship with that company,” he says. “The current plans to increase ownership and inject our Chinese tobacco operations into Vision Grande will cement our relationship and give a solid platform for further growth in this rapidly consolidating industry.”
All three components of the agreement being the sale of assets, new shares subscription and further share subscription, are subject to regulatory approval in Hong Kong and approval of the independent shareholders of Vision Grande. Amcor will not be eligible to vote on these resolutions.
After completion of these transactions, Amcor will own approximately 44 per cent of the issued capital of Vision Grande.
Amcor will also have the right to appoint the chairman and a majority of directors to the board of Vision Grande. Amcor intends to consolidate the earnings of Vision Grande from the completion of the transaction.
