The Orora Ltd (ASX: ORA) share price has sunk 17% after the packaging business returned to trade after the takeover and capital raising announcements.
Orora is a leading manufacturer and distributor of “sustainable, innovative packaging and visual solutions for customers across the world.”
Orora share price
Investors push the sell button
Orora has entered into a deal to buy 100% of Saverglass through the acquisition of all of the shares of Olympe SAS for an enterprise value of €1.29 billion, or $2.16 billion.
The ASX share described Saverglass as a global leader in the design, manufacturing, customisation and decoration of high-end bottles for the premium and ultra-premium spirit and wine markets.
Why does Orora want this business? It’s because it “represents a unique acquisition of a high-quality business, enhancing Orora’s strategic advantage, scale, diversification and its future growth opportunities.”
It will become “the centrepiece” of Orora’s global glass business unit and will operate as a third platform for growth.
In the first full financial year of ownership, the deal is expected to add to profit / earnings per share (EPS) in the “mid-single” digits, which includes the full annual run-rate of synergies. It could be helpful for the Orora share price.
Capital raising
Orora said that the acquisition will be funded by a capital raising, including a fully underwritten equity raising of approximately $1.35 billion, with a $450 million institutional placement and a $895 million 1-for-2.55 accelerated non-renounceable entitlement offer, as well as $875 million of debt.
In other words, new and existing institutional investors/fund managers will fund $450 million of the deal, and existing shareholders will get the chance to subscribe for 1 new Orora share for every 2.55 shares they already own.
Orora announced today that existing and new institutional shareholders raised approximately $1.12 billion at an offer price of $2.70 per new share, representing a 21.3% discount to the last closing Orora share price on 25 August 2023, adjusted for the $0.09 per share FY23 final dividend.
Final thoughts on the Orora share price
It’s now a lot cheaper than it was before, so it could be an opportunity to invest while the business is valued much cheaper. It’s a big move, and the capital raising is being done at a large discount – hopefully it works out for the company.
Orora has a solid dividend record, so it could be an option for investors focused on ASX dividend shares.
