Ball to sell US steel food packaging assets in a $600m deal

Ball Corporation has announced that it will sell its US steel food and aerosol packaging assets to form a new joint venture, after agreeing a $600 million deal with private equity firm Platinum Equity.

The US steel assets will form part of the new Ball Metalpack joint venture, in which Platinum Equity will be the majority stakeholder with a 51% stake, while Ball will hold a 49% stake in the new venture.

Ball expects the sale and joint venture transaction to close in July 2018, and approximately 1,300 Ball employees will transfer to the new joint venture company.

The tinplate manufacturing facilities in Canton (Brookline and Warner Rd.) and Columbus, Ohio; Milwaukee and Deforest, Wisconsin; Chestnut Hill, Tennessee; Horsham, Pennsylvania; Springdale, Arkansas; and Oakdale, California will all be operated by the new company.

Jim Peterson, who manages those assets for Ball Corporation, will act as the CEO of the joint venture.

Ball says that it will still control its Findlay, Ohio, metal packaging production facility, and the plant will produce two-piece steel food cans for Ball Metalpack as part of a long-term supply contract.

John A. Hayes, chairman, president and CEO of Ball Corporation said: “We have a long-standing relationship with the Platinum Equity team. They have created tremendous value in the packaging sector, our management knows them well and we are confident they are the ideal partner.

“The upfront cash proceeds and our retained stake in the joint venture company will benefit Ball shareholders.

“This agreement enhances our ability to immediately return additional value to shareholders via share repurchases, reduce Ball’s leverage and grow EVA dollars.

“More than half of the proceeds from today’s announcement will be used to repurchase stock, increasing the 2018 share buyback to be in the range of $675 million by year-end.

“Our 2019 financial goals of $2 billion of comparable EBITDA and free cash flow in excess of $1 billion remain unchanged, although they will be slightly more challenging to achieve following the sale of these assets and its related earnings and cash flow.”

Platinum Equity partner Louis Samson added: “Platinum has a lot of experience in this sector, and our M&A&O playbook is proven to drive earnings growth and create value.

“We are excited to partner with Ball Corporation and the Ball Metalpack management team headed up by Jim Peterson, and are confident that together we’ll deliver for customers and shareholders alike.”