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The share price of FTSE 100 packaging giant Bunzl (LSE:BNZL) rose 41.00 pence to 1,056 by 14:17 today on news of a package of three new acquisitions.
The Bunzl share price had a very good 2012, opening at 883.00 and closing the year at 1,009.00 whilst posting a 5-year high of 1,167.00 on 08 August. The shares reached 1,066 at noon today before falling off slightly.
Bunzl is on an acquisition spree. On 02 May 2012 Bunzl announced that it had complete three separate acquisitions in the US, Israel, and Australia. The acquisitions included Chicago-based FoodHandler, a supplier of disposable gloves, Tel Aviv-based Meichaley Zahav Ltd, a supplier of packaging products to the food service market, and Queensland-based Star Services, a supplier of disposable products to wholesalers and redistributors.
On 27 June 2012 Bunzl acquired the Seattle-based Service Paper Company, a supplier of disposable supplies to grocery, food service, food processing, and industrial packaging customers in the US Pacific Northwest.
On 19 December 2012 the Bunzl announced the acquisition of two more companies. This time the company acquired the Toronto firm, McCordick Glove & Safety Inc. McCordick is a distributor of gloves and personal protection equipment to industrial and retail customers. Bunzl also acquired the Australian company Atlas Health Care, an Adelaide-based supplier of consumable medical products.
Now, less than a month later, Bunzl has added three more companies to its stables. Today’s announcement included the purchase of Vicsa Safety in Chile. This purveyor of personal protection products has subsidiaries in Peru, Argentina, Columbia, and Mexico. The other two acquisitions were US based companies, one in Chicago and one in Monterey, California. Schwartz Paper Company provides consumables and supply chain solutions for non-retail and grocery customers. Destiny Packaging supplies flexible packaging and produce bags to growers in California and Arizona.
The statement released by Bunzl this morning indicated that the Company’s total cost of acquisitions for 2012, including the ones announced today is approximately £270 million versus an aggregate annualized income of £500 million.
Organic growth is nice, but when you can acquire £500 million of revenue for £270 million in cash, after a bit of due diligence, you might want to take advantage of the opportunity.
CEO Mike Roney hinted that the acquisition spree is not over. Speaking regarding the amount spent in 2012, Roney said, “It would be nice to beat that record in 2013. We have a lot of firepower left.”
