Bemis Company Inc. (BMS) recently concluded the tender offer to purchase the shares of Dixie Toga S.A., which is a subsidiary of Bemis’ wholly owned Brazilian subsidiary Dendron Participacoes Ltda. The tender was offered to purchase approximately 38 million shares of Dixie Toga, in order to increase the stake of Dendron Participacoes.
Bemis now holds more than 99% of the total number of outstanding shares in Dixie Toga, increased from approximately 86%. Based on the current exchange rates the cost of the tender was approximately $90 million, up from the previous estimate of $50-$55 million.
Bemis revealed its intention to increase the stake in Dixie Toga in May 2010 and hoped to complete the tender offer by the third quarter last year only. Bemis had acquired a majority stake in Dixie Toga, one of the largest packaging firms in South America, in 2005 for $250 million, which included all of the South American firm’s common stock and 43% of the non-voting preferred stock. In addition, Bemis also assumed $35 million of Dixie Toga’s debt.
Prior to this, Bemis acquired Alcan Packaging, a business unit of Rio Tinto plc (RIO). on March 1, 2010. Through the deal, Bemis added 23 flexible packaging facilities of Alcan in the U.S., Canada, Mexico, Brazil, Argentina and New Zealand to its portfolio.
These facilities produce flexible packaging mainly for the food and beverage industries and collectively recorded 2009 net sales totaling $1.4 billion. We currently have a Zacks #3 Rank (short-term ‘Hold’ recommendation) on the stock.
Neenah, Wisconsin-based Bemis is a manufacturer of flexible packaging products and pressure sensitive materials sold primarily to the food industry. The company also sells its products to other customers in the chemical, agribusiness, medical, pharmaceutical, personal care, electronics, automotive, construction and graphic industries. Avery Dennison Corporation (AVY) is one of the closest competitors of Bemis.
