Ball Announces Proposed Acquisition of Rexam PLC
Highlights
-- Cash and stock transaction valued at £5.4 billion ($8.4 billion), including
the assumption of net debt
-- Aligns with Drive for 10 vision and long-standing capital allocation
strategy
-- Leverages complementary product lines and company cultures
-- $300 million of achievable synergies by 2018
-- Highly accretive to earnings per share, generates significant free cash flow
and increases EVA®
BROOMFIELD, Colo., Feb. 19, 2015 -- Ball Corporation (NYSE:BLL)
and Rexam PLC (LSE:REX) today 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 Feb. 17, 2015, and an exchange rate of US$1.54: £1
on that date representing an equity value of £4.3 billion ($6.6 billion). This
represents a premium of 36 percent over Rexam's closing price as of Feb. 4,
2015, the last trading day prior to media speculation concerning a potential
transaction. Upon completion of the transaction, Rexam shareholders will own
approximately 19 percent 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 U.S.
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.
"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 percent over time, generating significant
free cash flow and growing EVA dollars," said Hayes.
Stuart Chambers, chairman, Rexam said, "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."
Scott C. Morrison, senior vice president and chief financial officer, said,
"The financing structure for the transaction has been committed by a diverse
set of global financial institutions offering competitive pricing and borrowing
flexibility."
"Ball's existing strong free cash flow coupled with the free cash flow of Rexam
will allow us to aggressively pay down debt post-closing as we have done
following past highly accretive acquisitions such as Reynolds Metals in 1998,
Schmalbach-Lubeca in 2002, U.S. Can in 2006 and the AB InBev plants acquisition
in 2009. Given the cash generative capabilities and the $300 million of annual
run-rate synergies of today's proposed transaction, we expect to maintain a
solid credit profile after this transaction is complete. Our pro forma leverage
will be approximately 4.5 times net debt to EBITDA following this transaction,
a level similar to our leverage following the Reynolds Metals transaction, when
we were a much smaller company. Once we have reduced the leverage to levels in
the range of 3.0 times net debt to EBITDA, the company will re-initiate its
share repurchase program, and we are targeting 2018 for that," said Morrison.
In summary, John A. Hayes, chairman, president and chief executive officer,
said, "As our customers' global reach and product portfolios expand and
consumer packaging preferences evolve, the Ball and Rexam combination allows us
to remain competitive versus other packaging substrates and responsive to our
stakeholders needs for sustainable, innovative and low-cost packaging
solutions."
Representing Ball Corporation as lead financial advisor is Greenhill & Co.,
with Skadden, Arps, Slate, Meagher & Flom acting as lead legal advisor, and
Axinn, Veltrop and Harkrider acting as lead antitrust advisor. Deutsche Bank
AG, London Branch and Goldman, Sachs & Co. also represent Ball as financial
advisors. In addition to cash on hand, committed debt financing is being
provided by Deutsche Bank Securities Inc., Bank of America Merrill Lynch,
Goldman Sachs Bank USA, KeyBank National Association, Royal Bank of Scotland
PLC and Rabobank.
About Ball Corporation
Ball Corporation supplies innovative, sustainable packaging solutions for
beverage, food and household products customers, as well as aerospace and other
technologies and services primarily for the U.S. government. Ball Corporation
and its subsidiaries employ 14,500 people worldwide and reported 2014 sales of
$8.6 billion. For more information, visit www.ball.com, or connect with us on
Facebook or Twitter.
About Rexam PLC
Rexam PLC is a leading metal beverage can maker headquartered in London, United
Kingdom. Rexam has 55 can making plants in more than 20 countries across the
globe and around 8,000 employees. For more information, visit www.rexam.com.
Conference Call Details
Ball Corporation (NYSE: BLL) will host a conference call on Thursday, February
19, 2015, to discuss the proposed transaction. The call will begin at 6 a.m.
Mountain Time (1 p.m. U.K. Time). The North American toll-free number for the
call is 800-920-2905, the U.K. toll-free number is 0800 528 0280 and other
international callers should dial 212-271-4651. Please use the following URL
for a webcast of the live call:
http://edge.media-server.com/m/p/gmdrcysf/lan/en
For those unable to listen to the live call, a taped replay will be available
from 8:30 a.m. Mountain Time (3:30 p.m. U.K. time) on Thursday, February 19,
2015, until 8:30 a.m. Mountain Time (3:30 p.m. U.K. time) on February 26, 2015.
To access the replay, call 800-633-8284 (toll-free North American callers) or
0800 692 0831 (toll-free U.K. callers) or 402-977-9140 (international callers)
and use reservation number 21762045. A written transcript of the call will be
posted within 48 hours of the call's conclusion to Ball's website at
www.ball.com/investors.
Solicitation Legends
This press release may be deemed to be solicitation material in respect of the
proposed acquisition of Rexam PLC ("Rexam") by Ball Corporation ("Ball"),
including the issuance of shares of Ball common stock in respect of the
proposed acquisition. In connection with the foregoing proposed issuance of
Ball common stock, Ball expects to file a proxy statement on Schedule 14A with
the Securities and Exchange Commission (the "SEC"). To the extent Ball effects
the acquisition of Rexam as a Scheme under United Kingdom law, the issuance of
Ball common stock in the acquisition would not be expected to require
registration under the Securities Act of 1933, as amended (the "Act"), pursuant
to an exemption provided by Section 3(a)(10) under the Act. In the event that
Ball determines to conduct the acquisition pursuant to an offer or otherwise in
a manner that is not exempt from the registration requirements of the Act, it
will file a registration statement with the SEC containing a prospectus with
respect to the Ball common stock that would be issued in the acquisition.
INVESTORS AND SECURITY HOLDERS OF BALL ARE URGED TO READ THESE MATERIALS
(INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT
DOCUMENTS IN CONNECTION WITH THE ACQUISITION THAT BALL WILL FILE WITH THE SEC
WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION
ABOUT BALL, THE PROPOSED ISSUANCE OF BALL COMMON STOCK, AND THE PROPOSED
ACQUISITION. The preliminary proxy statement, the definitive proxy statement,
the registration statement/prospectus, in each case as applicable, and other
relevant materials in connection with the proposed issuance of Ball common
stock and the acquisition (when they become available), and any other documents
filed by Ball with the SEC, may be obtained free of charge at the SEC's website
at www.sec.gov. In addition, investors and security holders may obtain free
copies of the documents filed with the SEC by sending a request to: Investor
Relations, Ball Corp., 10 Longs Peak Drive, Broomfield, CO 80021-2510.
Ball and its directors and executive officers may be deemed to be participants
in the solicitation of proxies from Ball's stockholders with respect to the
proposed acquisition, including the proposed issuance of Ball common stock in
respect of the proposed acquisition. Information about Ball's directors and
executive officers and their ownership of Ball's common stock is set forth in
Ball's Annual Report on Form 10-K for the fiscal year ended December 31, 2013,
which was filed with the SEC on February 24, 2014 and Ball's proxy statement
for its 2014 Annual Meeting of Stockholders, which was filed with the SEC on
March 13, 2014. Information regarding the identity of the potential
participants, and their direct or indirect interests in the solicitation, by
security holdings or otherwise, will be set forth in the proxy statement and/or
prospectus and other materials to be filed with the SEC in connection with the
proposed acquisition and issuance of Ball common stock in the proposed
acquisition.
Forward-Looking Statements
This release contains "forward-looking" statements concerning future events and
financial performance. Words such as "expects," "anticipates," "estimates" and
similar expressions identify forward-looking statements. Such statements are
subject to risks and uncertainties, which could cause actual results to differ
materially from those expressed or implied. The company undertakes no
obligation to publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise. Key risks and
uncertainties are summarized in filings with the Securities and Exchange
Commission, including Exhibit 99 in our Form 10-K, which are available on our
website and at www.sec.gov. Factors that might affect: a) our packaging
segments include product demand fluctuations; availability/cost of raw
materials; competitive packaging, pricing and substitution; changes in climate
and weather; crop yields; competitive activity; failure to achieve productivity
improvements or cost reductions; mandatory deposit or other restrictive
packaging laws; customer and supplier consolidation, power and supply chain
influence; changes in major customer or supplier contracts or loss of a major
customer or supplier; political instability and sanctions; and changes in
foreign exchange or tax rates; b) our aerospace segment include funding,
authorization, availability and returns of government and commercial contracts;
and delays, extensions and technical uncertainties affecting segment contracts;
c) the company as a whole include those listed plus: changes in senior
management; regulatory action or issues including tax, environmental, health
and workplace safety, including U.S. FDA and other actions or public concerns
affecting products filled in our containers, or chemicals or substances used in
raw materials or in the manufacturing process; technological developments and
innovations; litigation; strikes; labor cost changes; rates of return on assets
of the company's defined benefit retirement plans; pension changes;
uncertainties surrounding the U.S. government budget, sequestration and debt
limit; reduced cash flow; ability to achieve cost-out initiatives; interest
rates affecting our debt; and successful or unsuccessful acquisitions and
divestitures, including, with respect to the proposed Rexam PLC acquisition,
the effect of the announcement of the acquisition on our business
relationships, operating results and business generally; the occurrence of any
event or other circumstances that could give rise to the termination of our
definitive agreement with Rexam PLC in respect of the acquisition; the outcome
of any legal proceedings that may be instituted against us related to the
definitive agreement with Rexam PLC; and the failure to satisfy conditions to
completion of the acquisition of Rexam PLC, including the receipt of all
required regulatory approvals.
No profit forecast
Nothing contained herein shall be deemed to be a forecast, projection or
estimate of the future financial performance of Ball, Rexam or the combined
business following completion of the combination, unless otherwise stated.
Disclosure requirements of the UK Takeover Code
Rexam is a company subject to the jurisdiction of the UK Takeover Code (the
"Code")
Under Rule 8.3(a) of the Code, any person who is interested in 1 per cent. or
more of any class of relevant securities of an offeree company or of any
securities exchange offeror (being any offeror other than an offeror in respect
of which it has been announced that its offer is, or is likely to be, solely in
cash) must make an Opening Position Disclosure following the commencement of
the offer period and, if later, following the announcement in which any
securities exchange offeror is first identified. An Opening Position Disclosure
must contain details of the person's interests and short positions in, and
rights to subscribe for, any relevant securities of each of (i) the offeree
company and (ii) any securities exchange offeror(s). An Opening Position
Disclosure by a person to whom Rule 8.3(a) applies must be made by no later
than 3.30 pm (London time) on the 10th Business Day following the commencement
of the offer period and, if appropriate, by no later than 3.30 pm (London time)
on the 10th Business Day following the announcement in which any securities
exchange offeror is first identified. Relevant persons who deal in the relevant
securities of the offeree company or of a securities exchange offeror prior to
the deadline for making an Opening Position Disclosure must instead make a
Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1
per cent. or more of any class of relevant securities of the offeree company or
of any securities exchange offeror must make a Dealing Disclosure if the person
deals in any relevant securities of the offeree company or of any securities
exchange offeror. A Dealing Disclosure must contain details of the dealing
concerned and of the person's interests and short positions in, and rights to
subscribe for, any relevant securities of each of (i) the offeree company and
(ii) any securities exchange offeror, save to the extent that these details
have previously been disclosed under Rule 8. A Dealing Disclosure by a person
to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time)
on the Business Day following the date of the relevant dealing.
Disclosures are therefore required in the shares of Ball and Rexam.
If two or more persons act together pursuant to an agreement or understanding,
whether formal or informal, to acquire or control an interest in relevant
securities of an offeree company or a securities exchange offeror, they will be
deemed to be a single person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree company and by
any offeror and Dealing Disclosures must also be made by the offeree company,
by any offeror and by any persons acting in concert with any of them (see Rules
8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose relevant
securities Opening Position Disclosures and Dealing Disclosures must be made
can be found in the Disclosure Table on the Panel's website at
www.thetakeoverpanel.org.uk, including details of the number of relevant
securities in issue, when the offer period commenced and when any offeror was
first identified. You should contact the Panel's Market Surveillance Unit on
+44 (0)20 7638 0129 if you are in any doubt as to whether you are required to
make an Opening Position Disclosure or a Dealing Disclosure.
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SOURCE Ball Corporation
CONTACT: Investor Contact, Ann T. Scott, 303-460-3537, ascott@ball.com, or
Media Contact, Renee Robinson, 303-460-2476, rarobins@ball.com