Amcor announced the purchase of Jiangsu Shendra Group, a Chinese flexible packaging business, for US$62 million. The acquisition marks the continuity of Amcor's strategy of using cash flow from their operations to expand their business in developing nations.
Amcor is a multinational packing company based in Hawthorn, Victoria. The company has manufacturing plants in 42 countries across 300 sites.
Amcor operates globally, with North America holding 30% of their sales, followed by Western Europe with 26%, Australia and New Zealand with 22% and Emerging Markets holding 20%. China, Thailand, Indonesia, India and Singapore are categorized under the bracket of emerging markets for the company. Currently, Amcor holds a strong position in the Chinese packaging business with annual revenues of over US$400 million. The revenue comes from nine plants covering all major regions of China.
The Jiangsu Shendra Group purchase comes out as a good fit for Amcor. The packaging company will continue operations for the Jiangsu Shendra Group as existing clients and two acquired plants are in close proximity to the existing Amcor plant located in Jiangsu, Eastern China.
Amcor believes that the acquisition of the Jiangsu Shendra Group will ensure Amcor's market leadership in Eastern China. The area accounts for around 40% of China's GDP, which is beneficial for Amcor. The Jiangsu Shendra sales of US$78 million are expected to increase Chinese revenue by around 7%, with additional benefits to be realized through cost sharing between the Amcor and Jiangsu Shendra.
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