425: Amcor Initiates Consent Solicitations for Berry Global's Outstanding Notes in Connection with Merger

Amcor has commenced consent solicitations from holders of Berry Global's outstanding notes to amend certain indenture provisions in connection with their previously announced merger.

Summary

• Amcor plc has announced the commencement of consent solicitations from holders of Berry Global, Inc.'s outstanding senior notes.
• The solicitations aim to amend the indentures governing these notes in connection with the proposed merger between Amcor and Berry Global Group, Inc.
• The goal is to ensure that the notes have identical credit support and rank equally with Amcor's existing senior notes after the merger.
• The obligations of Amcor and Berry to complete the merger are not conditional on the successful completion of these consent solicitations.
• The proposed amendments involve Amcor providing a parent guarantee for Berry's notes, and Berry providing a cross-guarantee for Amcor's existing senior notes.
• Holders who consent to the amendments will receive a cash payment of $2.50 per $1,000 principal amount of notes.
• The consent solicitations will expire on March 5, 2025, unless extended by Amcor.
• The record date for the consent solicitations is February 25, 2025.
• Goldman Sachs & Co. LLC and UBS Investment Bank are the lead solicitation agents.

Sentiment

Score: 7

Explanation: The sentiment is neutral to slightly positive. The announcement is a procedural step in a larger merger, and the consent solicitation offers a small financial incentive to noteholders. However, there are inherent risks associated with the merger's completion.

Positives

• Noteholders who consent to the proposed amendments will receive a cash payment of $2.50 per $1,000 principal amount.
• The proposed amendments aim to provide identical credit support for Berry's notes, potentially increasing their value post-merger.
• The merger is expected to create synergies and benefits for the combined company.

Negatives

• If the required consents are not received, no holder will be eligible for the consent payment.
• The proposed amendments will become effective immediately upon execution of the supplemental indenture, whether or not a holder delivered a consent.
• The consent payment will only be paid upon consummation of the merger, which is not guaranteed.

Risks

• The merger agreement could be terminated.
• Regulatory approvals may not be obtained in a timely manner or at all.
• The anticipated benefits of the merger may not be realized.
• Unexpected costs or expenses could result from the merger.
• Litigation related to the merger could arise.
• The merger could disrupt management's time from ongoing business operations.
• The merger could adversely affect the ability of Berry and Amcor to retain key personnel and customers.
• General economic, market, and social developments and conditions could impact the merger.
• Changes to existing business relationships during the pendency of the merger could affect financial performance.
• The ability to obtain financing in connection with the transactions contemplated by the Merger on favorable terms, if at all.

Future Outlook

The document outlines the process for amending the indentures of Berry Global's outstanding notes in anticipation of the merger with Amcor, with the aim of aligning the credit support of these notes with Amcor's existing debt. The success of the consent solicitations is not a condition for the merger's completion.

Industry Context

This announcement reflects a common practice in mergers and acquisitions where the acquiring company seeks to streamline debt structures and ensure consistent credit support across the combined entity's obligations. Consent solicitations are frequently used to obtain bondholder approval for changes to debt covenants.

Comparison to Industry Standards

• Consent solicitations are a standard practice in M&A transactions involving publicly traded debt.
• The consent fee of $2.50 per $1,000 principal amount is within the typical range for such solicitations.
• Similar transactions, such as the acquisition of Bemis by Amcor in 2019, also involved consent solicitations to align debt covenants.

Stakeholder Impact

• Shareholders of Amcor and Berry Global Group, Inc. are impacted by the proposed merger and the potential synergies and benefits it may create.
• Noteholders of Berry Global's outstanding notes are impacted by the consent solicitations and the potential changes to the indentures.
• Employees of Amcor and Berry Global Group, Inc. may be impacted by the integration of the two companies.

Next Steps

• Holders of Berry Global's outstanding notes must decide whether to consent to the proposed amendments by the March 5, 2025 deadline.
• Amcor will assess the results of the consent solicitations and determine whether the required consents have been received.
• If the required consents are received, the Berry Issuer will enter into supplemental indentures to effect the proposed amendments.
• The merger between Amcor and Berry Global Group, Inc. will proceed subject to the satisfaction of other closing conditions.

Key Dates