SCG Chemicals gears up for Integrated Supply Chain service, based on its partnership marketing initiative known as “Building Success Together”, with comprehensive customer support ranging from packaging design, raw material selection and formulation and production to quality testing. The company has partnered with the ‘School Rice’ project - which produces jasmine rice to sustain the operation of Lamplaimat Pattana School in Buriram and its surrounding communities, in the comprehensive development of packaging. The rice product is available at Tops and Central Food Hall outlets nationwide.
Mr. Cholanat Yanaranop, President of SCG Chemicals stated that ” their key business strategy is based on the concept of customer partnership known as “Building Success Together”, which focuses on building long-term, strategic relationships with customers which is better than typical vendor-purchaser interactions. SCG Chemicals offers integrated supply chain services to customers through involvement in their entire production chain – partnering with converters and product owner in designing and developing plastic packaging to suit the needs of both product owners and end-customers. The benefits that converters gain are new product features, formulation diversification to suit different needs, cost effectiveness and competitive edge enhancement. As for product owners who seek for quality packaging at optimal cost, our partnership support gives them a total peace of mind - easing them the burden and saving their time in dealing with packaging producer.”
“Our participation in the ‘School Rice’ project perfectly showcases our integrated services. We worked closely with product owners in designing packaging, selecting plastic resin and formulation, coordinating in production process and testing until we came up with plastic packaging for jasmine rice with all desired qualifications and at a competitive price.”
The ‘School Rice’ packaging developed by SCG Chemicals is produced from high quality plastic resin - strong, durable, flexible, seal tightly, tear-resistant, vapour-proof and most importantly, able to conserve the quality and fragrant aroma of jasmine rice from harvest until consumption.
According to Mr. Mechai Viravaidya, President of Business for Rural Education and Development Co., Ltd., “The Lamplaimat Pattana Primary School was set up by James Clark and me with the aim to be a truly student-oriented model school where children could learn to be good members of society, develop their creativity and leadership skills as well as learn to appreciate their hometowns. The school also serves as the focal point for community empowerment and poverty eradication. Its operation has been successful and practical. In order to be self-sustainable and able to extend the development concept to other communities in the long term, the school needs to generate its own income. That’s why we have collaborated with students, teachers, parents, the surrounding community and the Rice College in order to produce and sell good quality rice to consumers.
“We obtained the optimal packaging solution for ‘School Rice’ through strong partnership support from SCG Chemicals. Their involvement in product technology consulting, packaging design and coordinating with packaging producers helped us launch ‘School Rice’ to the marketplace at the right time and of the desired quality. These are critical factors of success for our product.”
Ms. Chiranun Poopat, Senior Vice President Buying and Marketing, Central Food Retail Co., Ltd., the operator of Central Food Hall, Tops Market and Tops Super, said, “we endorse the concept of sustainable economy and continue to support sustainable development for farmers, rural students and communities. It’s our honor to be the distributor of School Rice as it is produced in one of the best rice growing areas and we can offer our customers product of such good quality at a very reasonable price.”
“School Rice” is 100% jasmine rice produced with the help of students, teachers, parents and the surrounding communities of Lamplaimat Pattana School in Burirum. It is available in five kilogram package, at Baht 195, and is sold at 102 outlets of Central Food Hall, Tops Market and Tops Super all over the country.
Thursday, November 19, 2009
Wednesday, November 4, 2009
Green trend slow to catch on locally
It might take up to five years for Thailand to see a definite trend in consumer demand for green food and beverage packaging, according to Gloyta Na Thalang,communications director of Tetra Pak (Thailand) Ltd.
The global leader in food and beverage packaging said Thailand attached less importance to the environment than developed countries because of lack of solid support by the government.
"The government does not yet have clear measures, whereas many countries that have changed their packaging policies are backed by government measures and export regulations," said Mrs Gloyta.
"It took us over five years to educate the public ... that our products are able to be recycled, so it might take another five years to see a definite concern about green packaging by consumers here."
Mrs Gloyta said that in other countries,paper-based packaging is gaining ground over glass and plastic, as the latter is petroleum-based. The rise in paperbased cartons can be seen from the growing number of people drinking soy milk,as it is usually packaged in cartons.
Prom Sirisant, Tetra Pak's portfolio manager, said the local trend to converting to cartons would develop slowly as an influence from other countries.
Even wine companies are looking to package their wine in cartons."French rabbit" wines, for instance, use Tetra beverage cartons to show that their product is eco-friendly, said Mrs Gloyta.
Mrs Gloyta said beverage cartons would also replace aluminium cans for food packaging, since the latter also in-volve heavy use of petroleum. European manufacturers are making this switch,but the market is still small in Thailand.
Tetra Pak is the first packaging manufacturer in Thailand to be certified with the carbon label for beverage cartons since the start of this year. The label certifies that the production process cuts carbon dioxide emissions by at least 10% in 2008 compared to 2002 levels.
"However, even consumers today still might not be that interested in carbon labels, so we need to educate them,"said Mrs Gloyta.
75% of Tetra's packaging is made of paper, while 20% is made up of polyethylene and 5% aluminium foil, all of which can be recycled.
In 2008,25.6 billion Tetra Pak packages were collected and recycled in 47 recycling plants worldwide.
Mr Prom said the company's research and development centres were currently looking to reduce non-renewable raw materials to a smaller percentage.
The paper in Tetra Pak's cartons is made from wood fibre that comes from sustainably managed and certified forest plantations, in which every tree that has been cut down will be replaced by four to 20 newly planted trees, said Mrs Gloyta.
"I think it's up to the willingness of consumers and our customers and whether they [Tetra's customers] want to differentiate in terms of environmental concern. One day when they see that the market is ready, we will see a shift to beverage cartons," added Mrs Gloyta.
Out of 1.53 trillion litres of worldwide beverage consumption in 2008, Tetra Pak supplied 140 billion packages for 70.6 billion litres.
The global leader in food and beverage packaging said Thailand attached less importance to the environment than developed countries because of lack of solid support by the government.
"The government does not yet have clear measures, whereas many countries that have changed their packaging policies are backed by government measures and export regulations," said Mrs Gloyta.
"It took us over five years to educate the public ... that our products are able to be recycled, so it might take another five years to see a definite concern about green packaging by consumers here."
Mrs Gloyta said that in other countries,paper-based packaging is gaining ground over glass and plastic, as the latter is petroleum-based. The rise in paperbased cartons can be seen from the growing number of people drinking soy milk,as it is usually packaged in cartons.
Prom Sirisant, Tetra Pak's portfolio manager, said the local trend to converting to cartons would develop slowly as an influence from other countries.
Even wine companies are looking to package their wine in cartons."French rabbit" wines, for instance, use Tetra beverage cartons to show that their product is eco-friendly, said Mrs Gloyta.
Mrs Gloyta said beverage cartons would also replace aluminium cans for food packaging, since the latter also in-volve heavy use of petroleum. European manufacturers are making this switch,but the market is still small in Thailand.
Tetra Pak is the first packaging manufacturer in Thailand to be certified with the carbon label for beverage cartons since the start of this year. The label certifies that the production process cuts carbon dioxide emissions by at least 10% in 2008 compared to 2002 levels.
"However, even consumers today still might not be that interested in carbon labels, so we need to educate them,"said Mrs Gloyta.
75% of Tetra's packaging is made of paper, while 20% is made up of polyethylene and 5% aluminium foil, all of which can be recycled.
In 2008,25.6 billion Tetra Pak packages were collected and recycled in 47 recycling plants worldwide.
Mr Prom said the company's research and development centres were currently looking to reduce non-renewable raw materials to a smaller percentage.
The paper in Tetra Pak's cartons is made from wood fibre that comes from sustainably managed and certified forest plantations, in which every tree that has been cut down will be replaced by four to 20 newly planted trees, said Mrs Gloyta.
"I think it's up to the willingness of consumers and our customers and whether they [Tetra's customers] want to differentiate in terms of environmental concern. One day when they see that the market is ready, we will see a shift to beverage cartons," added Mrs Gloyta.
Out of 1.53 trillion litres of worldwide beverage consumption in 2008, Tetra Pak supplied 140 billion packages for 70.6 billion litres.
Thursday, September 24, 2009
ASEAN EXPORT ORDERS A BOON TO PRINTERS
The printing industry expects its exports to rise by up to 15 per cent this year mainly on advance orders from the Asean market.
Kriengkrai Thiennukul, chairman of the Printing and Paper Packaging Industry Club of the Federation of Thai Industries, said yesterday that the main factor encouraging the industry for next year is orders from Asean, which accounts for 60 per cent of total printing exports. Overseas importers have placed orders for three to six months in advance.
However, total printing sales this year were expected to be flat at US$1.45 billion or about Bt50 billion, he said.
If markets abroad could improve next year, exports are estimated to reach Bt55 billion-Bt60 billion. The industry shifted its focus to Asean a few years ago as it saw stronger performance in this region than in the US and Europe.
Printing exports in the first eight months of this year dropped by 9 per cent from the same period last year, but the export performances of other Southeast Asian countries were worse, declining 10-20 per cent.
The Printing and Paper Packaging Industry Club formerly targeted the country to be the printing hub of Asia.
Pornchai Rattanachaikanont, president of the Thai Printing Association, said manufacturers this year could export more kraft paper to Japan, and cardboard paper to India and Saudi Arabia.
The industry has also gained a positive outlook for this quarter, as there are promising orders for Christmas and New Year from both local and overseas markets.
Thailand is now hosting Pack Print International 2009 and the Thai Inter-national Plastic and Rubber Exhibition, which open today and continue to Saturday at the Bangkok International Trade and Exhibition Centre. Some 400 printing, packaging, plastic and rubber manufacturers from 20 countries are joining the exhibition.
Messe Dusseldorf Asia, the organiser, expects the event to attract about 20,000 visitors over its four-day run.
Kriengkrai Thiennukul, chairman of the Printing and Paper Packaging Industry Club of the Federation of Thai Industries, said yesterday that the main factor encouraging the industry for next year is orders from Asean, which accounts for 60 per cent of total printing exports. Overseas importers have placed orders for three to six months in advance.
However, total printing sales this year were expected to be flat at US$1.45 billion or about Bt50 billion, he said.
If markets abroad could improve next year, exports are estimated to reach Bt55 billion-Bt60 billion. The industry shifted its focus to Asean a few years ago as it saw stronger performance in this region than in the US and Europe.
Printing exports in the first eight months of this year dropped by 9 per cent from the same period last year, but the export performances of other Southeast Asian countries were worse, declining 10-20 per cent.
The Printing and Paper Packaging Industry Club formerly targeted the country to be the printing hub of Asia.
Pornchai Rattanachaikanont, president of the Thai Printing Association, said manufacturers this year could export more kraft paper to Japan, and cardboard paper to India and Saudi Arabia.
The industry has also gained a positive outlook for this quarter, as there are promising orders for Christmas and New Year from both local and overseas markets.
Thailand is now hosting Pack Print International 2009 and the Thai Inter-national Plastic and Rubber Exhibition, which open today and continue to Saturday at the Bangkok International Trade and Exhibition Centre. Some 400 printing, packaging, plastic and rubber manufacturers from 20 countries are joining the exhibition.
Messe Dusseldorf Asia, the organiser, expects the event to attract about 20,000 visitors over its four-day run.
Sunday, September 6, 2009
WASTE NOT WANT NOT
Instead of letting mountains of used drink cartons sit and wait for years to be digested naturally in the scrapyard,Tetra Pak (Thailand) Ltd recently started turning them into educational supplies for underprivileged children.cartons from consumers for recycling isn't an easy pattern to establish, especially for the long term. To reduce waste and increase the use of recycling material, Tetra Pak is encouraging consumers to drop off used drink cartons at any Big C branch nationwide or else sell them to recycling shops.
In 2000, the recycling network was introduced into 134 schools in Bangkok before expanding into communities and the rubbish recycling industry. In communities, housewives have been encouraged to produce material resembling paper with pulper made for home use sponsored by the company; and turn it into handicrafts. Of the millions of used cartons, allied factories have been producing green boards that can be turned into objects such as furniture and stationery.
The better the condition of the used cartons, the better the quality of the recycled materials. Therefore, the cartons should be cleaned before being kept and dropped off at one of the provided depository boxes.
Gloyta Nathalang, communications director of Tetra Pak, says the company has been very careful about the recycling campaign. Since it aims to slow down global warming, says Ms Gloyta:"We don't want to add more waste to the world."
Her team asked consumers to minimise the waste that may be produced during the cleaning process. Water from previous washing procedures can be used to clean the cartons instead of using clean tap water.Consumers are urged to drop off their used cartons in large amounts; if no dropoff box is provided in their community,consumers should deposit them whenever they come into town and have access to one there.
The used cartons can be recycled in two different ways: Whole cartons can be shredded and compressed to make panel boards, or they can be separated from the paper material to make various re-pulp paper products such as notebooks. Plastic and aluminium foil can be moulded as panel boards or green boards.
Last year, the company joined with 30 Young Jaew of Channel 3 for the "Jaew Saves Earth" campaign, which calls for the donation of used drink cartons by environmentally aware consumers. About 21 million cartons, or 208 tonnes, of drink cartons were collected during the six-month project. The amount could not only be translated into a reduction of 188 tonnes of greenhouse gases released into the atmosphere, but it also produced a countless number of educational tools for Border Patrol Police Schools nationwide.
About 20 used cartons can be turned into one paper notebook;2,000 used cartons can be turned into a set of classroom desks and chairs. A mountain of rubbish was turned into 416,000 school notebooks and 6,240 sets of classroom desks and chairs.Another 27 Green Library sets were also produced.
The company is making good progress.Compared with other countries in the region, Tetra Pak (Thailand) has shown outstanding statistics about the amount of recycled products made from used cartons.
Ms Gloyta is hoping that 100% of used cartons get recycled one day. In reality,only 7,750 tonnes of cartons went back into the recycling process. A total of 1,655 tonnes, or 12% of all cartons sold by the company, were dropped off by end-users.Last year there were 12,632 tonnes of cartons reused, while 3,667 tonnes, or 12.5%of all cartons sold, were returned by endusers.
The company expects the recycling rate to reach 13% by the end of this year and 20% in the near future.
To achieve the figure as quickly as possible, the company is not only trying to make people aware of the environmental issue, but is also adding more value to the recycled products. For example, the products by green designer Singh Intarachuto were completely made from waste.
"People will stop thinking why they have to pay more for furniture made from rubbish," says Ms Gloyta.
So her dream target of recycling 100%of all cartons into products for daily use may be possible.
How are you helping to reduce your carbon footprint?Share your eco-friendly activities with us by emailing outlook@bangkokpost.co.th with the subject 'green'.
In 2000, the recycling network was introduced into 134 schools in Bangkok before expanding into communities and the rubbish recycling industry. In communities, housewives have been encouraged to produce material resembling paper with pulper made for home use sponsored by the company; and turn it into handicrafts. Of the millions of used cartons, allied factories have been producing green boards that can be turned into objects such as furniture and stationery.
The better the condition of the used cartons, the better the quality of the recycled materials. Therefore, the cartons should be cleaned before being kept and dropped off at one of the provided depository boxes.
Gloyta Nathalang, communications director of Tetra Pak, says the company has been very careful about the recycling campaign. Since it aims to slow down global warming, says Ms Gloyta:"We don't want to add more waste to the world."
Her team asked consumers to minimise the waste that may be produced during the cleaning process. Water from previous washing procedures can be used to clean the cartons instead of using clean tap water.Consumers are urged to drop off their used cartons in large amounts; if no dropoff box is provided in their community,consumers should deposit them whenever they come into town and have access to one there.
The used cartons can be recycled in two different ways: Whole cartons can be shredded and compressed to make panel boards, or they can be separated from the paper material to make various re-pulp paper products such as notebooks. Plastic and aluminium foil can be moulded as panel boards or green boards.
Last year, the company joined with 30 Young Jaew of Channel 3 for the "Jaew Saves Earth" campaign, which calls for the donation of used drink cartons by environmentally aware consumers. About 21 million cartons, or 208 tonnes, of drink cartons were collected during the six-month project. The amount could not only be translated into a reduction of 188 tonnes of greenhouse gases released into the atmosphere, but it also produced a countless number of educational tools for Border Patrol Police Schools nationwide.
About 20 used cartons can be turned into one paper notebook;2,000 used cartons can be turned into a set of classroom desks and chairs. A mountain of rubbish was turned into 416,000 school notebooks and 6,240 sets of classroom desks and chairs.Another 27 Green Library sets were also produced.
The company is making good progress.Compared with other countries in the region, Tetra Pak (Thailand) has shown outstanding statistics about the amount of recycled products made from used cartons.
Ms Gloyta is hoping that 100% of used cartons get recycled one day. In reality,only 7,750 tonnes of cartons went back into the recycling process. A total of 1,655 tonnes, or 12% of all cartons sold by the company, were dropped off by end-users.Last year there were 12,632 tonnes of cartons reused, while 3,667 tonnes, or 12.5%of all cartons sold, were returned by endusers.
The company expects the recycling rate to reach 13% by the end of this year and 20% in the near future.
To achieve the figure as quickly as possible, the company is not only trying to make people aware of the environmental issue, but is also adding more value to the recycled products. For example, the products by green designer Singh Intarachuto were completely made from waste.
"People will stop thinking why they have to pay more for furniture made from rubbish," says Ms Gloyta.
So her dream target of recycling 100%of all cartons into products for daily use may be possible.
How are you helping to reduce your carbon footprint?Share your eco-friendly activities with us by emailing outlook@bangkokpost.co.th with the subject 'green'.
Monday, August 31, 2009
KING PAC EYES NO1 SPOT
King Pac Industrial(KPI), Asia's largest plastic-bag manufacturer, wants to become the world's leading plasticbag maket in the next five years and to develop the country's first industrial estate for the plastics sector.
KPI was established in 2000 and is 100-per-cent owned by the Julasaksrisakul family. The company manufactures various types of plastic bags with a monthly production capacity of 8,000 tonnes. It exports to markets around the world including Japan, Europe and the United States.
Pattida Julasksrisakul, assistant managing director and the owner's daughter, said the firm previously focused only on international markets, but changed its strategy to begin marketing in Thailand last vear following the impact of the global economic crisis and an increase in its production capacity.
"In only one year, the make-up of our sales has changed to 65 per cent exports and 35 per cent domestic sales. This success is due to our position as the leading source of bags for plastic-bag users," she said.
To achieve its five-year goal, it plans to make aggressive investments and list on the Stock Exchange of Thailand to mobilise funds. It presently has registered capital of Bt200 million.
"If we want to be the world's number one, we need to boost our production capacity to more than 18,000 tonnes per month, which will require around Bt1 billion for new machinery alone," she said.
KPI also has a plan to develop 700 to 800 rai of land in Chon Buri to be the country's first plastics industrial estate.
"Our idea is to create more bargaining power for local plastic-makers and strengthen them in terms of the supply chain and technology transfer.
"Forty per cent of the total area will be reserved for our company and the rest for other plastic-marker," she said.
"Our strength is that we have our own know-how, technology and innovative products. We are ready to transfer our know-how to local plastic goods-makers to develop their production process," Pattida said.
She said the firm allocated 1 per cent of its sales revenue every year to research and development. It generated total sales of Bt4.5 billion in 2008 and targets growth of 10 to 15 per cent in 2009.
KPI has set up a subsidiary, Dpac Industrial, to be responsible for trading and marketing in Thailand.
Despite the rapid growth of its domestic sales, KPI will maintain the proportion of its sales at 65 per cent from exports and 35 per cent from the domestic market, she added.
KPI was established in 2000 and is 100-per-cent owned by the Julasaksrisakul family. The company manufactures various types of plastic bags with a monthly production capacity of 8,000 tonnes. It exports to markets around the world including Japan, Europe and the United States.
Pattida Julasksrisakul, assistant managing director and the owner's daughter, said the firm previously focused only on international markets, but changed its strategy to begin marketing in Thailand last vear following the impact of the global economic crisis and an increase in its production capacity.
"In only one year, the make-up of our sales has changed to 65 per cent exports and 35 per cent domestic sales. This success is due to our position as the leading source of bags for plastic-bag users," she said.
To achieve its five-year goal, it plans to make aggressive investments and list on the Stock Exchange of Thailand to mobilise funds. It presently has registered capital of Bt200 million.
"If we want to be the world's number one, we need to boost our production capacity to more than 18,000 tonnes per month, which will require around Bt1 billion for new machinery alone," she said.
KPI also has a plan to develop 700 to 800 rai of land in Chon Buri to be the country's first plastics industrial estate.
"Our idea is to create more bargaining power for local plastic-makers and strengthen them in terms of the supply chain and technology transfer.
"Forty per cent of the total area will be reserved for our company and the rest for other plastic-marker," she said.
"Our strength is that we have our own know-how, technology and innovative products. We are ready to transfer our know-how to local plastic goods-makers to develop their production process," Pattida said.
She said the firm allocated 1 per cent of its sales revenue every year to research and development. It generated total sales of Bt4.5 billion in 2008 and targets growth of 10 to 15 per cent in 2009.
KPI has set up a subsidiary, Dpac Industrial, to be responsible for trading and marketing in Thailand.
Despite the rapid growth of its domestic sales, KPI will maintain the proportion of its sales at 65 per cent from exports and 35 per cent from the domestic market, she added.
Wednesday, August 26, 2009
Local plastics producers optimistic
The outlook for the local plastics industry is improving in the second half of this year, thanks to demand for plastic packaging in the food and electronics industries, according to the Petroleum Institute of Thailand (PTIT).
According to the institute's research,plastic product growth contracted by 5% in the first half, reflecting poor purchasing power of consumers.
However, the study found that the trend in orders had started to rebound,said Kriengsak Wongpromrat, the assistant executive director of the PTIT.
Demand is rising for packaging for food, agricultural products and for hard disk drives but is sluggish among customers automotive, construction and electrical appliance industries.
"After declining continuously since the economic slowdown started (late last year), demand was steady early this month. That showed us the falling pace had stopped and may be starting to head upward this year, but this is hard to predict," said Mr Kriengsak.
Ready-to-eat food products have played a big role in lifting plastic demand, as more consumers cut expenses by eating more meals at home, he said.
"But [demand for packaging of] hard disk drives in the electronic sector has risen due to the global demand," he said.
Mr Kriengsak said that packaging businesses accounted for 40% of the local plastics industry, with 12% shared by electronics,7% by automobiles and parts, and 6% by construction materials.The total market was worth 370 billion baht last year with volume of 3.25 million tonnes.
PTIT, as an information service provider and researcher for the petroleum and related industries, was hired by the Office of Industrial Economics to collect data on the plastics sector. The aim is to better serve the demand of operators as well as develop the industry in the long term.
A total of 3,000 plastic and related industries out of 5,000 registered companies have participated by providing data to the institute. Major categories include 900 companies in packaging,followed by electronics, automobiles and construction materials.
Arthit Wuthikaro, the OIE directorgeneral, said the research would help operators gauge demand trends, such as for high-grade film products, which are now imported.
The OIE will join with the Board of Investment and other agencies to promote locally made film products through investment privileges, Mr Arthit said.
For the future, research will go toward the bioplastic industry, since concern about climate change is on the rise throughout the world.
According to the institute's research,plastic product growth contracted by 5% in the first half, reflecting poor purchasing power of consumers.
However, the study found that the trend in orders had started to rebound,said Kriengsak Wongpromrat, the assistant executive director of the PTIT.
Demand is rising for packaging for food, agricultural products and for hard disk drives but is sluggish among customers automotive, construction and electrical appliance industries.
"After declining continuously since the economic slowdown started (late last year), demand was steady early this month. That showed us the falling pace had stopped and may be starting to head upward this year, but this is hard to predict," said Mr Kriengsak.
Ready-to-eat food products have played a big role in lifting plastic demand, as more consumers cut expenses by eating more meals at home, he said.
"But [demand for packaging of] hard disk drives in the electronic sector has risen due to the global demand," he said.
Mr Kriengsak said that packaging businesses accounted for 40% of the local plastics industry, with 12% shared by electronics,7% by automobiles and parts, and 6% by construction materials.The total market was worth 370 billion baht last year with volume of 3.25 million tonnes.
PTIT, as an information service provider and researcher for the petroleum and related industries, was hired by the Office of Industrial Economics to collect data on the plastics sector. The aim is to better serve the demand of operators as well as develop the industry in the long term.
A total of 3,000 plastic and related industries out of 5,000 registered companies have participated by providing data to the institute. Major categories include 900 companies in packaging,followed by electronics, automobiles and construction materials.
Arthit Wuthikaro, the OIE directorgeneral, said the research would help operators gauge demand trends, such as for high-grade film products, which are now imported.
The OIE will join with the Board of Investment and other agencies to promote locally made film products through investment privileges, Mr Arthit said.
For the future, research will go toward the bioplastic industry, since concern about climate change is on the rise throughout the world.
Tuesday, August 18, 2009
Amcor offers $2 billion for Rio packager
Amcor Ltd of Australia offered yesterday to buy part of Rio Tinto Group's Alcan unit for US$2.03 billion to become the biggest supplier of drug packaging.
Amcor will get the global pharmaceuticals and tobacco packaging units as well as the Asian and European food businesses Rio acquired in its US$38 billion takeover of Alcan Inc in 2007.
"The offer will be funded by a A$1.6 billion (US$1.3 billion) share sale and bank debt," Amcor said in a statement.
The takeover, Amcor's biggest, will boost sales 50% and may arrest two years of declining profit. It will make Amcor the world's largest supplier of packaging to the pharmaceutical, healthcare and personal-care industries, and the biggest supplier for tobacco in Europe, according to Deutsche Bank AG.
"Amcor is paying between 5.5 and 5.7 times the units adjusted earnings before interest, tax, depreciation and amortisation for the past 12 months,"managing director Ken Mackenzie said.
Bemis Co paid 6.7 times earnings before interest, tax, depreciation and amortisation for Rio's Food Americas business last month.
"It's a pretty good price," said Jason Beddow, chief investment officer at Argo Investments Ltd, an Adelaide-based investment company."Everyone's always talked that packaging needs further consolidation; that's structurally probably a positive as well."
"Now is the right time in the economic cycle to be making acquisitions as asset values are substantially lower than they have been for many years," Mackenzie said.
The company's previous biggest purchase was the $1.5 billion takeover of the PET bottling and container lid business of Germany's Schmalbach-Lubeca AG in 2002.
"London-based Rio has agreed to a period of exclusivity with Amcor and will respond to the offer after consulting with the relevant European works councils," the company said.
"Amcor's offer is in the interests of all stakeholders," Rio's chief financial officer Guy Elliot said."The company is seeking to sell non-mining assets to cut debt that ballooned 19-fold after it bought Alcan."
Rio has also raised $2.5 billion this year from selling iron ore and potash assets in Latin America, a US coal mine and a share in a Chinese aluminium smelter. It has had $6.6 billion of asset sales in the last 18 months.
Amcor will add T.G.I. Friday's Skillet Meals and Sheba petfood to its existing packaging products, which include the packaging for Fishermans Friend throat lozenges and Gatorade sports drinks. It manufactures cans, plastic bags, icecream wrappers and sterile surgical instrument trays.
"Alcan Packaging remains the most obvious solution to Amcor's growth challenge, given the neat strategic and growth aspects that it would bring," Royal Bank of Scotland Group Plc analysts wrote in a note on Monday.
Amcor is the world's largest producer of PET packaging and the unit accounted for 34% of sales in the year ended June 30. The flexibles unit, which manufactures packaging for food, hospital sterilisation units and tobacco, was the second biggest earner in the year.
The acquisition requires approval from anti-trust and competition authorities in the US and the EU.
Amcor will get the global pharmaceuticals and tobacco packaging units as well as the Asian and European food businesses Rio acquired in its US$38 billion takeover of Alcan Inc in 2007.
"The offer will be funded by a A$1.6 billion (US$1.3 billion) share sale and bank debt," Amcor said in a statement.
The takeover, Amcor's biggest, will boost sales 50% and may arrest two years of declining profit. It will make Amcor the world's largest supplier of packaging to the pharmaceutical, healthcare and personal-care industries, and the biggest supplier for tobacco in Europe, according to Deutsche Bank AG.
"Amcor is paying between 5.5 and 5.7 times the units adjusted earnings before interest, tax, depreciation and amortisation for the past 12 months,"managing director Ken Mackenzie said.
Bemis Co paid 6.7 times earnings before interest, tax, depreciation and amortisation for Rio's Food Americas business last month.
"It's a pretty good price," said Jason Beddow, chief investment officer at Argo Investments Ltd, an Adelaide-based investment company."Everyone's always talked that packaging needs further consolidation; that's structurally probably a positive as well."
"Now is the right time in the economic cycle to be making acquisitions as asset values are substantially lower than they have been for many years," Mackenzie said.
The company's previous biggest purchase was the $1.5 billion takeover of the PET bottling and container lid business of Germany's Schmalbach-Lubeca AG in 2002.
"London-based Rio has agreed to a period of exclusivity with Amcor and will respond to the offer after consulting with the relevant European works councils," the company said.
"Amcor's offer is in the interests of all stakeholders," Rio's chief financial officer Guy Elliot said."The company is seeking to sell non-mining assets to cut debt that ballooned 19-fold after it bought Alcan."
Rio has also raised $2.5 billion this year from selling iron ore and potash assets in Latin America, a US coal mine and a share in a Chinese aluminium smelter. It has had $6.6 billion of asset sales in the last 18 months.
Amcor will add T.G.I. Friday's Skillet Meals and Sheba petfood to its existing packaging products, which include the packaging for Fishermans Friend throat lozenges and Gatorade sports drinks. It manufactures cans, plastic bags, icecream wrappers and sterile surgical instrument trays.
"Alcan Packaging remains the most obvious solution to Amcor's growth challenge, given the neat strategic and growth aspects that it would bring," Royal Bank of Scotland Group Plc analysts wrote in a note on Monday.
Amcor is the world's largest producer of PET packaging and the unit accounted for 34% of sales in the year ended June 30. The flexibles unit, which manufactures packaging for food, hospital sterilisation units and tobacco, was the second biggest earner in the year.
The acquisition requires approval from anti-trust and competition authorities in the US and the EU.
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