Packaging company Orora Ltd (ASX: ORA) has been one of the best performers today with a 5% gain to $2.93.
Today's gain is the result of the Amcor Limited (ASX: AMC) spin-off receiving a number of broker upgrades this morning following yesterday's acquisition of The Register Print Group for US$44 million.
The Register Print Group is a full service provider of point of purchase retail display solutions to major U.S. retailers and brands. The acquisition expands Orora's point of purchase footprint into the north east of the United States, which management believes strengthens its ability to service national corporate customers.
Within the first two to three years synergies in excess of US$1.5 million are expected to be realised thanks to both improved purchasing and integration of back office services. Management also expects it to boost revenue growth by 5% per annum for the first three years.
The acquisition has gone down well with brokers. According to research notes out of Morgan Stanley and Citi, Orora's shares have been given overweight and buy ratings respectively.
I've been a big fan of Orora for a while now and would have to agree with their analysts that this acquisition makes the company even more attractive.
This will be the second point of purchase acquisition the company has made this year, following the purchase of IntegraColor Ltd for US$77 million in March. I don't expect this to be the last either.
I believe the company is on a path to becoming a market-leader in a fragmented point of purchase market. Which is great news as it should bring a certain level of diversification to its earnings in the future.
In my opinion Orora is a fantastic buy and hold investment thanks to its strong growth prospects and defensive qualities. In light of this I would choose it ahead of its peers Amcor, Pro-Pac Packaging Limited (ASX: PPG), and Pact Group Holdings Ltd (ASX: PGH).