What is the expected impact of the acquisition on Amcor’s leverage ratios and credit profile?

Impact on Leverage and Credit Profile

Because the Berry Global purchase was executed as an all‑stock transaction, Amcor did not raise new debt to fund the deal, but it now inherits Berry’s balance‑sheet liabilities. Consequently, the consolidated net‑debt‑to‑EBITDA and net‑debt‑to‑EBIT margins will rise sharply in FY 2025—roughly a 30‑40 % jump versus the prior quarter, given Berry’s $4‑5 bn of debt relative to Amcor’s pre‑acquisition EBITDA of about $2.4 bn. The combined entity’s credit metrics will therefore move downward, nudging Amcor into a higher‑risk credit bracket (e.g., from “BBB‑” toward “BBB”/“BB‑” territory) until the anticipated FY 2026 earnings surge (double‑digit net‑income growth) and cost‑synergy benefits start to improve the leverage ratios.

Trading Implications

• Equity: The market is likely to price in both the upside from a larger, more diversified packaging platform and the near‑term credit drag. Expect modest upside on the stock if the share‑price reaction stays supportive of the strategic rationale, but watch for profit‑taking on the earnings beat and for any downgrade‑risk (S&P, Moody’s) that could trigger a short‑term dip and widened credit spreads.
  
• Credit: Fixed‑income traders should anticipate a widening of Amcor’s spread (≈ 30‑50 bps) and a potential downgrade watch in the next rating cycle. Positioning via high‑yield corporate bonds or credit‑default swaps could capture that risk premium.
  
• Technical: The stock is trading near its 50‑day moving average, with the 200‑day MA still upward‑sloping—suggesting continued bullish bias if the earnings guidance holds. A break below the 50‑day MA coupled with a spread‑widening event could trigger a short‑cover rally for contrarian traders.

Bottom line: The acquisition will raise Amcor’s leverage ratios and modestly weaken its credit profile in the short term, but the projected FY 2026 earnings growth and synergies are expected to restore credit metrics over the next 12‑18 months. Traders should balance the near‑term credit‑risk premium against the longer‑term upside from the enlarged, higher‑margin packaging business.