Ann: FY18 Full Year Results Investor Presentation, page-8

Another high-quality business which the broader fall in equity markets in recent weeks has presented to investors at relatively undemanding valuation metrics.

Assuming:

1. the merger with Bemis proceeds early next year (the chances of which are good, but not guaranteed) and
2. management executes the merger without any major problems (chances of this are also good, I think)...

... then, based on my crude maths, in the first full-year post of the merged entity (i.e., FY2020), the company will be generating EBITDA of in the region of US$2.2bn to US$2.3bn and NPAT between US$1.1bn and US$1.2bn. Free Cash Flow generation will be around US$1.2bn

In terms of capital structure of the merged entity, there will be approximately 470m additional AMC shares issued, taking total Shares on Issue to around 1.63 bn.

Based on AMC's current share price and prevailing A$:US$ exchange rate, that equates to a market cap of ~$15bn.

AMC's current net debt of US$4bn will be added to Bemis's US$1.5bn, so total net debt of the merged entity of US$5.5bn

In other words, an Enterprise Value of US$20.5bn for MergeCo.

Pro forma Net Debt-to-EBITDA is 2.5x, which looks reasonably full, but this will be a highly cash generative business, given OCF covers Stay-in-Business Capex by a factor of at least 3 times.

Valuation-wise, from the above information it can be deduced that, at today's AMC share price, the merged entity would be trading on:

P/E of 13x
EV/EBITDA of 9.3x
and FCF Yield of almost 6%

A dividend payout ratio maintained at the current 70% level would not be imprudent, resulting in a Dividend Yield of 5.4%

With those metrics being looking quite appealing to me, I recommenced buying AMC shares in recent days.