Ball Corporation has completed the long-awaited acquisition of Rexam for approximately $6.1 billion of cash and equity, plus the assumption of approximately $2.4 billion of net debt, making it by far the largest manufacturer of beverage cans in the world.
The company also completed the required sale of its divestment business to Ardagh Group, receiving cash proceeds of approximately $3.1 billion at closing.
The deal to acquire Rexam will generates annual net synergies in excess of $300 million by the end of year three, Ball said, and grow its workforce to 18,700 across five different continents. Its pro forma net sales for 2015 are approximately $11 billion.
The combined company will retain Ball’s existing headquarters in Colorado, while Rexam’s base in London is expected to close as soon as the relevant functions required to support the combined group have been transferred – estimated to be by the end of the year.
“We’re delighted to move forward together as a leader in the packaging industry, supplying approximately 100 billion innovative, high-quality metal beverage containers from the world’s most efficient manufacturing footprint,” said John A. Hayes, chairman, president and chief executive officer of Ball Corporation. “We will immediately begin integrating the new business into our global metal beverage operations, maintaining a focus on Ball’s existing Drive for 10 vision, EVA philosophy, balance sheet management, free cash flow generation and capital allocation practices. Through this shared approach, we will drive in excess of $300 million in synergies by the end of the third year of combined operations.”
Scott C Morrison, senior vice president and chief financial officer of Ball, said the company was pleased with the financial implications of the deal.
“Our execution on synergies and combined strong free cash flow will allow us to deleverage rapidly,” he said. “We target our leverage to be in the range of 3 times in 2018, at which time we currently expect to re-initiate our share repurchase programme.”
“The long journey to today’s announcement only reaffirmed our acquisition rationale,” Hayes concluded. “Our customers’ global reach and product preferences continue to evolve, and Ball’s ability to create long-term value for our stakeholders rests on our ability to serve our customers anytime, anywhere and to ensure that the beverage can remains the package of choice among our customers and consumers. Our goal is quite simple: to make the beverage can the most sustainable package – economically, environmentally and socially – in the beverage supply chain. All of our employees are poised to execute our integration and synergy capture plans. As part of this, we are immediately initiating a 90-day review of the newly acquired business, including costs, capital, supply logistics and balance sheet management among others.”
Ball will announce its second quarter earnings on 4 August 2016, and will provide an update on its progress at that time.
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