Ball looking forward to buy Rexam

Ball looking forward to buy Rexam

US packaging company Ball is approaching a deal to buy British drinks can maker Rexam. The companies are at an advanced stage of negotiating a cash-and-share offer that would value Rexam at around £4 billion ($6.2 billion). According to Rexam, its shareholders will get 407 pence in cash and 0.04568 new Ball share for each Rexam share held, amounting to 628 pence per share.

Rexam directors are recommending an improved 628p a share from Ball. The recommended offer for Rexam comes at a 4% premium to the share price of 448p before the approach from Ball was made public.

The offer is a 2:1 ratio of cash to share, or 407p per Rexam share in cash and the balance in new Ball shares. Rexam shareholders will own a 20% stake in the new combined Ball company.

Graham Chipchase, Rexam chief executive, said, “Combining the two companies 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”.

Sales of the Colorado-based Ball, whose customers include Coca-Cola Co. and PepsiCo Inc., were down 3%to £3.83bn during the 12 months to December. Ball does packaging for food, healthcare and cosmetic products.

The can maker increased the number of cans it sold by 4%. This exceptional boost was due to the 2014 football world cup in Brazil. However, all three of the major currencies it trades in, which include the US dollar, Euro and Russian Rouble, slumped and impacted the results.

The company said that sales adjusting for currency movements were up 4%, and annual pre-tax profits increased to £343m in 2014, up from £339m a year earlier.

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