Research Overview

INDEX:
S&P 500
Sector:
Industrials
Position:
Short
Date:
Mar 10, 2020

After conducting a forensic financial and accounting review, Spruce Point believes Amcor Plc (NYSE: AMCR and ASX: AMC), a roll-up, and newly created S&P 500 company manufacturing company, formed through a stock-for-stock merger between Amcor (Australia) and Bemis (U.S.), is facing cost and revenue challenges as the world moves toward healthier and more environmentally conscious solutions. Based on our investigation, we estimate 40% to 60% downside risk to Amcor’s share price.

The report highlights several key concerns with the company, including:

  • We believe the Company is promoting an “organic” EPS growth story through suspect cost synergies
  • We find signs of a cash crunch calling into question management’s claims
  • We believe that free cash flow won’t improve and the dividend is at risk
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