Ball Corp. (IW 500/130) and Rexam Plc (IW 1000/653) agreed to sell $3.42 billion of assets to clear the way for their merger into the biggest maker of food and beverage cans. Ball will sell 17 can factories in the U.S., Europe and Brazil, plus other facilities to European glass and metal packaging company Ardagh Group SA, according to a statement Monday. Ardagh will issue $2.85 billion of bonds to help finance its purchase of the assets, the company said in a separate e-mail.
The European Union approved Broomfield, Co.-based Ball’s 4.4 billion pound (US$6.4 billion) acquisition of Rexam after the company agreed to sell 12 plants on the continent to eliminate antitrust concerns. Apollo Global Management, Blackstone Group LP and Madison Dearborn Partners were also among bidders for the assets.
“You feel it ticks everybody’s box,” said Sandy Morris, a London-based analyst at Jefferies International. “Until we know which plants precisely have been divested -- whether they’re standard cans or specialty cans -- it will be difficult for us to judge who’s come out of it with the best deal.”
Ball expects to complete its purchase of Rexam by the end of June. Goldman Sachs Group Inc. advised the company on the asset sales, while Greenhill & Co. is the lead adviser on its takeover of Rexam.
The assets to be sold had revenue of $3 billion last year. Ardagh is paying 9.1 times earnings before interest, taxes, depreciation and amortization of $375 million.
Luxembourg-based Ardagh’s bond offering will include $2 billion of senior secured notes denominated in euros and dollars, as well as $850 million of senior bonds also in the two currencies, according to its statement.
Ardagh reported a 6% increase in first-quarter EBITDA to 217 million euros (US$244 million), it said in an earnings report that was brought forward to coincide with the acquisition announcement. It also said Chief Executive Officer Niall Wall will step down in September after 10 years to be replaced by Ian Curley, the former chief financial officer of Smurfit Kappa.