The world’s second largest drinks can manufacturer, Rexam UK, has been approached by the largest, Ball Corporation US about a possible AU$8.4 billion takeover. Rexam and Ball, together with Crown Holdings in the US, account for more than 60% of global beverage can volumes, and close to 90% in Europe, North and South America, according to Rexam.
The combined Ball and Rexam company would control about 61% of the market for drinks cans in North America, about 69% in Europe and about 74% in Brazil, according to industry analysts.
Rexam makes approximately 62 billion can per year, that are used worldwide by brands such as Coca-Cola, Heineken and Red Bull and companies such as PepsiCo, AB InBev and Carlsberg.
On February 5, the company made a formal statement tha included. “Discussions on other matters are continuing and there can be no certainty any formal offer will be forthcoming, or as to the terms of any offer…A further announcement will be made when appropriate.”
Ball is considering a cash and shares offer valuing Rexam at about AU$8.4 billion or AU$12 a share. The sum would be paid two-thirds in cash and one-third in new Ball shares. Ball has a deadline of 5 March to announce its intention to make a formal offer.
Rexam is a leading player in beverage cans while Ball has a more diverse metal packaging portfolio, such as food cans and aerosols. The two companies overlap in the US and some parts of Europe. This has the potential to lead to closures of plants or disposals in order to satisfy antitrust authorities.
The takeover would give Rexam access to China, Vietnam and Myanmar that it does not currently have. Rexam has been expanding in emerging markets such as Brazil, India and Russia. Ball, like many of its American rivals, generally trades at a premium to its European competitors.
Rexam has 55 plants in 20 countries, employs about 8,000 people and is registered in London. The company’s focus is producing drinks cans after selling its healthcare containers and closures business to Berry Plastics Group Inc. last year for AU$173 million. Ball Corporation, which was founded in 1880 employs more than 14,500 and calls Broomfield, Colorado home.
