Khrom Investments Fund, LP on Amcor
Thesis
Khrom believes Amcor's merger with Berry Global has strengthened its competitive position through greater scale, a more consolidated industry structure and stronger purchasing power. Management expects at least $650 million of merger synergies by 2028, and Khrom believes those savings could help lift earnings to nearly $5 per share. The fund views recent packaging-volume weakness as cyclical rather than structural, with early evidence of a return to positive volume growth and operating leverage already appearing. Portfolio divestitures, the planned sale of the North American beverage business and deleveraging should further improve business quality and the balance sheet. Despite some multiple expansion, the shares were still trading at roughly 11 times Khrom's estimate of 2027 earnings versus a historical multiple around 14 times, leaving room for both earnings growth and multiple expansion if execution continues.
“Each component of our original thesis—volume normalization, substantial merger synergies, portfolio improvement, and deleveraging—is now beginning to materialize.”
Key risks
- Packaging volumes could weaken again rather than normalize
- Berry integration and synergy realization may fall short of expectations
- Asset sales and deleveraging may take longer or deliver less value than expected