Stock of the day: Orora Limited
Orora divests its North American packaging business for $1.8 billion to focus on core operations and reduce debt.
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This video was created on 4 September for IG audiences by ausbiz.
Stock of the day: Orora Limited (ASX:ORA)
Details of the Orora's strategic divestment
In a significant move, Orora Limited has sold its North American packaging business to US-based Veritiv for $1.8 billion, an earnings before interest, taxes, depreciation, and amortization (EBITDA) multiple of 9.9 based on FY24 projections.. This sale marks a strategic pivot towards future growth and financial health.
After taxes, Orora expects to net about $1.7 billion in cash, significantly boosting its financial position. CEO Brian Lowe views this sale as the beginning of a new era for Orora, highlighted by planned expansions at the Rockley Cans facility in Queensland.
Market response and strategic focus
The market has responded positively to Orora Limited's move, appreciating its efforts to streamline operations and reduce debt. However, challenges remain from past decisions, such as the acquisition of Sabreglass in France for $2.2 billion, which underperformed expectations. This French company specializes in uniquely designed bottles for high-end drinks, a niche but problematic area for Orora.
This recent sale not only addresses financial pressures but also refocuses Orora on its primary business of drinks packaging. This strategy includes both Sabreglass and its other international operations.
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