Writing to Bemis CEO Henry Theisen, the president of Workers United Bruce Raynor said the proposed $1.2bn deal announced last month may be too risky and could put its future profitability in doubt.
Flexible packaging firm Bemis plans to finance the buy with $1bn in new debt, a figure that the US union head says will raise the company’s debt-capital ratio from about 26 per cent to 48 per cent, well above its target ratio of 30 – 40 per cent.
“We are concerned over the impact of the company’s decision to assume a heavy debt load and substantially alter the company’s size and capital structure in the midst of a global economic recession,” said Raynor.
Regulatory headaches
The letter also raised questions about the likelihood of regulatory approval suggesting Bemis could fall into difficulty with the competition authorities.
Raynor said Bemis has a history of legal troubles and alleged anti-competitive behaviour that could put regulatory approval for the acquisition in doubt.
He cited a number of lawsuits in which Bemis stands accused of price fixing and asked what steps the company has taken to prevent anti-competitive problems arising in the future.
Integration challenge
Besides these concerns, Workers United is also worried about the challenge of integrating the Alcan business given that it is several times larger than any company acquired by Bemis in the last ten years.
“Its integration into Bemis’s existing structure may prove more difficult and costly than anticipated,” said Raynor.
UNI Graphical Global Union, which represents workers in printing and packaging across the world, has also expressed concern about the Bemis acquisition and the proposed purchase of other Alcan units by Amcor.
“Changes of this size will undoubtedly mean restructures across the operations and the potential for job losses,” said the union in a statement.
Earlier in the week, Australian packaging giant Amcor offered to buy the European and Asian arms of Alcan Food Packaging along with its pharmaceutical and tobacco businesses for $2025m (€1434m).