Rexam and Ball to form drinks can monolith
AMERICAN drinks can manufacturer Ball Corporation yesterday agreed a deal to buy UK rival Rexam in a £4.43bn deal that would create an industry giant.
The deal would see Rexam shareholders get 407p in cash and 0.04568 new Ball shares for each Rexam share held, amounting to 628p per share. The UK firm has negotiated a break fee of seven per cent of the transaction value , around £300m, if antitrust issues scupper the deal, valuing Rexam at $8.4bn (£5.4bn) debt-inclusive.
The cash-and-stock deal will combine the two largest drinks can makers by volume, establishing a go-to supplier for customers seeking single contracts across markets.
“We believe that the proposed combination with Ball is an excellent opportunity for all stakeholders,” said Rexam chief executive Graham Chipchase. “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.”
Rexam, which manufactures cans for Coca-Cola and AB InBev, saw its stock rise five per cent yesterday following the news, but Ball’s closed down 4.29 per cent. Analysts said the offer was fair, but that investors had concerns over the antitrust issue.
“As there are so many regulatory approvals required for such a merger to go through, I think the market is discounting the probability of it happening. I think they’re going to have to do a lot of asset disposals, it’s not a simple merger in that sense,” said Thomas Picherit of independent research firm AlphaValue.
Deutsche Bank, Greenhill and Goldman Sachs are advising Ball Corporation; with Barclays, Credit Suisse, Rothschild and Merrill Lynch International serving Rexam.
BEHIND THE DEAL
FRESHFIELDS BRUCKHAUS DERINGER | DAVID SONTER
1 Sonter became a Freshfields partner in 2002, focusing on M&A’s in Britain, Europe and Brazil.
2 He recently advised Liberty Global on its acquisition of a 6.4 per cent stake in ITV and Medtronic on its $43bn Irish takeover of Clovidien.
3 When he’s not advising on high-profile deals, Sonter enjoys scuba diving, wine, swimming and listening to music
Also advising…
Deutsche Bank, Greenhill, Goldman Sachs, Barclays, Credit Suisse, Rothschild and Merrill Lynch International