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Ball seals a $820M deal
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April 23, 1998: 3:37 p.m. ET
Packaging concern acquires Reynolds' global aluminum can business
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Dateline (CNNfn) - Packaging powerhouse Ball Corp. on Thursday agreed to acquire the aluminum can business of one of its key competitors for $820 million, part of its long-term strategy to dominate the international market.
After months of negotiating, the Munice, Ind.-based company agreed to acquire virtually all of the aluminum beverage can assets from Reynolds Metals Co. in Richmond, Va.
The combined cash and stock transaction, Ball's largest acquisition ever, is expected to close in the second half of the year.
"Acquisition of the Reynolds beverage can manufacturing assets represents a major building block in our strategy to remain a low-cost, preferred supplier for aluminum beverage cans in North America," said George A. Sissel, chairman and chief executive of Ball Corp.
"Combining it with Ball's beverage can operations will afford us an even more solid foundation in North America and for the export of our technology and capital into emerging international packaging markets," he added.
Investors, however, did not share Sissel's enthusiasm. Ball's stock was trading at 39-1/2 in midday trading following the announcement, down 5/8, or 1.56 percent.
The company will use up to $100 million of its common stock to acquire all of Reynolds' North American beverage can manufacturing assets, which consists of 16 plants in 12 states and Puerto Rico.
Ball will also buy one-third of Reynolds' interest in Latasa, a Brazilian company which operates beverage can plants in Argentina, Brazil and Chile.
And the company agreed to consider buying Reynolds' minority stake in a can manufacturing company in Saudi Arabia.
The tranasaction is subject to regulatory approval.
The combined company will have annual production capacity of more than 50 billion cans worldwide and produce annual savings for Ball of more than $70 million.
Based on last year's results, combined sales in North America would be $2.3 billion.
Ball Corp. (BLL) produces rigid metal and plastic packaging products, largely for beverages and foods. The company already operates seven aluminum can plants in the United States as well as others overseas, including China, where it is the largest producer of beverage cans.
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