Global packaging giant, Amcor Limited (ASX: AMC) today announced it has entered into an agreement to acquire Souza Cruz's (a Brazilian tobacco company majority-owned by British American Tobacco) internal operations for $US30 million.
Souza Cruz is a leader in the Brazilian cigarette market and the acquisition will be backed by a long-term supply contract between it and Amcor. It is expected to generate approximately $US63 million in annual sales.
Amcor CEO and Managing Director Ken MacKenzie said, "This acquisition is aligned with our strategic objective of growing our packaging business in Latin America."
"It represents an excellent opportunity to support an important global customer by extending access to Amcor's global innovation platforms and strong operational capabilities," Mr MacKenzie added.
Although Amcor is listed on the ASX it derives just 6% of sales from Australia and New Zealand. Western Europe and North America account for around 62% of sales, with emerging markets making up the rest.
Should you buy Amcor shares?
During its most recent half year, Amcor boosted its Australian dividend by a whopping 24.9% on earnings growth of 6.7%. Whilst currency movements can create volatility in earnings, Amcor's geographical diversification allows it to make well-timed acquisitions, such as the one announced today.
Whilst its shares appear slightly expensive at today's prices, investors should look to add the stock on any meaningful set back in share price. It's currently forecast to yield a dividend of 3.4%.
