Merger Arb Update (Amcor/Berry)

Upcoming/recent developments… Per the terms of the Merger Agreement (MA), the companies are set to file HSR
by January 6, 2024.

Our outlook… Our preliminary research suggests the deal is likely to receive a second request from the DOJ. There
may be concerns with respect to the merger’s impact on a handful of segments of rigid and flexible packaging
markets, including packaging for baked goods, PET bottles, and certain segments of medical packaging. However,
our work suggests that divestitures of overlapping products within these categories (if required) are unlikely to
result in a breach to the MA’s $550 million revenue divestiture cap (Revenue Cap). Our research has also centered
on whether the deal implicates any antitrust issues that could not be remedied, namely whether the merger would
leave large consumer packaged goods manufacturers (e.g., Kraft) with a limited number of packaging suppliers that
possess significant economies of scale. Our research thus far does not suggest this deal will adversely impact
competition for large customers.

* Industry participants (who are not directly involved in the deal) have flagged potentially problematic
overlap in packaging used for bakery products, Polyethylene terephthalate (PET) bottles used for spirits, and
packaging materials used for disposable medical equipment. With respect to bakery products, we
understand that Amcor (which entered this market via the 2018 Bemis acquisition) has been the dominant
player and its main source of competition has been Berry. In segments such as bread packaging, industry
participants believe Amcor has a dominant share, while Berry accounts for much of the remaining
balance. Apparently, there are other bakery categories where the merging firms have a significant
presence, including clam shells (i.e., donut boxes) and deli bags.

* Amcor and Berry have also dominated the spirits PET bottle market. PET bottles typically range in size
from 50 milliliters (MM) to 750MM, and the merging firms have controlled much of this market for over the
last decade and a half. Amcor has a more significant share of the larger spirits PET bottle space
(where Berry is the secondary supplier), while Berry has a significantly greater presence in the smaller 100
MM or less space (where Amcor is the secondary supplier).

* The proposed merger might also implicate a problematic overlap in medical packaging. You may recall the
DOJ and EC were previously concerned with impact of the Amcor/Bemis and Amcor/Alcan mergers on
certain segments of the medical and pharmaceutical packaging markets, but industry participants do not
believe Berry has a presence in most segments of these markets. However, the two companies apparently
compete in certain medical packaging markets used for small disposable medical supplies. One industry
participant believes the combined company may account for well over half of this market (although we do
not have an independent resource or publication to verify this input).

* Our preliminary work also indicates additional overlap in rigid and flexible packaging markets, such as
snack & confectionary packaging, dry goods packaging, jars, and HDEP bottles. Feedback from industry
participants does not suggest the merger will harm competition in these product categories. That said, we
should acknowledge that we do not have a comprehensive list of overlapping markets between the firms
and related market share, so we may be overlooking other overlaps, some of which may be problematic
from an antitrust perspective.

* Although we do not have a comprehensive list of product overlap yet, we are still doubtful that the
Revenue Cap will be breached. Our research suggests that divestitures of assets in the aforementioned
problematic overlapping segments are collectively unlikely to breach the Revenue Cap. We should also note
that Amcor is being advised by Kirkland & Ellis, which previously counseled Amcor on its successful
acquisition of Bemis. The merging firms likely have access to information on product overlap and post-
merger share therein, and we presume the Revenue Cap was devised to address the areas that antitrust
advisors have flagged for potential divestiture. Given their prior experiences with the 2018 Bemis and 2009
Alcan acquisitions, Amcor likely understands how these markets are defined and which overlaps are at risk
of divestiture. We would also guess that the $550 million figure includes a buffer and is above counsel’s
divestiture expectations.

* We are also examining whether there are other potential antitrust issues implicated by this deal that
would not be remediable. The combined company would have a leading, but still relatively modest share of
U.S. flexible packaging (~20-25% combined share) and rigid packaging (~15-20%) markets. However, we
understand that CPGs would lose one of a handful of packaging companies with significant scale. For
instance, we are told that Amcor and Berry are two of the four largest suppliers of PET bottles overall, with
Graham and Plastipak being the other large producers. Therefore, there could be concerns from large
customers about consolidation amongst their largest current and potential suppliers. We understand that
CPG conglomerates like Nestle, Kraft, Mondelez, and Procter & Gamble, also primarily work with large-scale
suppliers, but there appear to be ample alternatives for food packaging. We are ultimately doubtful the DOJ
will have concerns with the impact of the deal on large customers because such customers have significant
countervailing buying power and there appear to be sufficient post-merger options in terms of large-scale
suppliers.

Watch for these developments… The outcome of the DOJ’s HPE/Juniper second request investigation. Our research
suggests the DOJ’s concern in that case may be with respect to its impact on competition for large enterprises. Our
odds that the DOJ pursues a large customer concern in the current deal would diminish if HPE/Juniper is cleared
without enforcement action as the large enterprise WLAN market appears to be more concentrated than the large
customer packaging segments implicated by the current deal. A decision in HPE/Juniper may have stronger read
through to the current situation if it is decided by the incoming interim chief of the DOJ Antitrust Division. The
Trump administration will likely announce an acting AAG for antitrust prior to or shortly after President-elect