Last updated: February 5, 2015 7:04 pm

Ball in talks with Rexam over 4.29bn bid

By Arash Massoudi and Tanya Powley in London and James Fontanella-Khan in New York

Ball Corporation of the US is in talks to buy Rexam, the UKbased drinks can manufacturer, in a 4.29bn deal that
would create a powerhouse in the production of cans for
beverages including soft drinks and beer.
Shares in Rexam jumped as much as 29 per cent to 575p on
Thursday after it confirmed a cash-and-share offer from
Bloomberg
Ball, valuing the London-based company at 610p a share.
The offer consisted of two-thirds cash 2.85bn and the remainder in Ball shares.
However, any deal between the two largest beverage can makers
would have to result in large-scale asset sales across several regions to appease competition
authorities, seen to be the main obstacle to a potential takeover.
Rexam, which disclosed the terms of the possible deal, said discussions on other matters are
continuing and stressed that a formal offer was far from certain.
A combined company would control about 61 per cent of the market for drinks cans in North
America, according to analysts. In Europe, Rexam and Ball would have a combined market share of
about 69 per cent, and about 74 per cent in Brazil.
They are going to have to divest so much to get this through the antitrust authorities, said Chip
Dillon, analyst at US-based Vertical Research Partners.
Both Rexam and Ball control around 21 per cent of the global 300bn can market. A beneficiary of
any asset sales could be US-based Crown, the third largest beverage can maker with a global market
share of 19 per cent.
Analysts said a deal between the two groups made strategic sense because of complementary
manufacturing footprints. Rexam, which produces about 60bn cans a year for drink companies
including PepsiCo, AB InBev and Carlsberg, is strong in emerging markets such as Russia and India,
while Ball has a presence in China, Vietnam and Myanmar.
The British canmaker has also been expanding its foothold in the Middle East. In January, it
completed the purchase of a majority stake in UAC, a Middle East beverage can maker.
A combined group would also appeal to the worlds biggest drinks companies who would prefer to
negotiate packaging contracts with one global player and pay lower prices.
Mr Dillon said a strong US dollar and Rexams decision to become a pure-play beverage can maker
is likely to have made it more attractive as a target. The British company sold its healthcare
packaging division last year for 490m to focus solely on making drink cans.
Theres no heavy lifting of having to divest non-core assets, he said.
Confirmation of the talks came as Ball reported fourth-quarter results on Thursday. Colorado-based
Ball, which has a market capitalisation of $8.9bn, has until 5 March to make a firm offer or walk
away under UK takeover rules.
Shares in Rexam closed the day up 20 per cent at 538p, while shares in Ball were up 9 per cent
$72.48 in afternoon New-York trading.