WASHINGTON (AP) -- Bemis Co. reached an agreement with the Department of Justice to sell off certain assets so it could buy the Alcan packaging unit from Rio Tinto PLC for about $1.2 billion.
The Justice Department announced the deal Wednesday, saying it preserves competition in the packaging industry.
Bemis said it would sell certain U.S. assets that generate yearly revenue of about $100 million, including two factories.
Without the asset sale, the acquisition would have combined Bemis and Alcan -- two of the biggest makers of flexible packaging for cheese and shrink wrap bags for fresh meat in the U.S., the department said in a statement. It said the market for flexible packaging is already highly concentrated.
The settlement requires Bemis to sell all of Alcan's contracts and intellectual property, factories in Catoosa, Okla., and Menasha, Wis., as well as other assets related to the packaging business.
"Without the divestitures, the department said the acquisition would lead to higher prices, lower quality, less favorable supply-chain options, reduced technical support and less innovation," the Justice Department said in a statement.
On Wednesday, the department filed an antitrust lawsuit to block the proposed acquisition but simultaneously filed the proposed settlement to let the deal move forward. The court must approve the settlement.
Mining conglomerate Rio Tinto is Alcan's parent company. It is based in the U.K.
Bemis is based in Neenah, Wis. Its shares fell 5 cents to $28.15 in after-hours trading Wednesday after the settlement was announced. They had closed regular trading up 4 cents at $28.20.