Ball Corporation Confirms Acquisition Terms of Rexam PLC

Ball Corporation and Rexam PLC recently announced the terms of a recommended offer by Ball to acquire all of the outstanding shares of Rexam in a cash and stock transaction. Under the terms of the offer, for each Rexam share, Rexam shareholders will receive 407p in cash and 0.04568 new Ball shares. The transaction values Rexam at 610p per share based on Ball’s 90-day volume weighted average price as of 17 February 2015, and an exchange rate of $1.54: £1 on that date representing an equity value of £4.3 billion ($6.6 billion).

This represents a premium of 36% over Rexam’s closing price as of 4 February 2015, the last trading day prior to media speculation concerning a potential transaction. Upon completion of the transaction, Rexam shareholders will own approximately 19% of Ball’s fully diluted shares outstanding. Both companies’ boards of directors unanimously support the transaction. In addition, Ball will provide a Mix and Match Facility, which will allow Rexam shareholders to elect, subject to offsetting elections, to vary the proportions in which they receive new Ball shares and cash.

The transaction is subject to approvals from each company’s shareholders and regulatory approvals. It is expected that the necessary clearances will be obtained in the first half of 2016. Following closing of the transaction, Ball will remain a New York Stock Exchange-listed company domiciled in the US.

Ball and Rexam represent two companies with complementary metal beverage packaging product offerings and strong cultural compatibility. The combined company will have pro forma 2014 revenue of approximately $15 billion and approximately 22,500 employees across five continents.

“The combination of Ball and Rexam creates a global metal beverage packaging supplier capable of leveraging its geographic presence, innovative products, and talented employees to better serve customers of all sizes across the globe; while at the same time generating significant shareholder value,” said John A Hayes, Chairman, President and Chief Executive Officer of Ball.

“Today’s announcement aligns with our Drive for 10 strategic vision of maximizing value in our existing businesses, expanding into new products and capabilities, aligning ourselves with the right customers and markets, broadening our geographic reach, and leveraging our know-how and technology. Once successfully closed, we expect the combination will provide $300 million of annual run-rate, value creating synergies in the areas of general and administrative, sourcing, freight, and logistics, and process, and efficiency savings, which are additive to our long-standing financial strategy of growing diluted earnings per share 10% to 15% over time, generating significant free cash flow and growing EVA dollars,” said Hayes.

Rexam Chairman Stuart Chambers added “The Rexam board believes that the proposed combination with Ball is a compelling opportunity for our stakeholders. By combining the two companies, we will create a truly global platform to deliver best-in-class service to customers based on a shared culture of manufacturing excellence and continued innovation. The proposed transaction offers our shareholders an attractive premium and an opportunity to participate in the value creation of the combined group through ownership of Ball shares.”

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