LONDON (Alliance News) - British drinks can maker Rexam PLC Thursday said it has reach a deal on the terms of a takeover offer from US rival Ball Corp, in a cash and share deal valuing Rexam at around GBP4.3 billion.
Under the terms of the takeover offer, for each Rexam share, Rexam shareholders will receive 407 pence in cash and 0.04568 new Ball shares.
Ball said that based on its closing share price of USD74.39 on Tuesday, and the currency exchange rates at the time of the formal offer, the takeover offer represents an indicative value of 628 pence per Rexam share, well above its current share price. Rexam shares were trading 3.7% higher at 556.64 pence Thursday morning following the announcement.
Under the terms, Rexam shareholders also will be able to choose the proportions in which they receive new Ball shares and cash. Rexam shareholders will own roughly 19% of the enlarged Ball share capital, assuming that approximately 32 million new Ball shares are issued in relation to the offer.
Rexam shareholders also will be entitled to the 2014 final dividend of 11.9 pence declared Thursday.
The takeover is still 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, Ball said in a statement.
The combined company will have pro forma 2014 revenue of approximately USD15 billion and approximately 22,500 employees across five continents, Ball said, adding that the enlarged group will create USD300 million in annual synergies by 2018.
"The combination of Ball and Rexam creates a global metal beverage packaging supplier capable of leveraging its geographic presence, innovative products, while at the same time generating significant shareholder value," said Ball Chairman and CEO John Hayes in a statement.
Rexam is one of the world's largest manufacturers of drinks cans, and it counts brewers AB InBev SA, Carlsberg A/S and Heineken NV, and soft drinks makers The Coca-Cola Co, PepsiCo Inc and Red Bull amongst its customers. Ball Corp has been going since the 1880s and makes drinks cans as well as tins for paint and aerosols. It also has an aerospace unit.
"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," said Rexam Chairman Stuart Chambers in the joint statement.
In a separate statement, Rexam reported its financial results for 2014, posting a higher pretax profit but a fall in revenue on a reported basis, alongside a 2% increase in total dividend for the year to 17.7 pence, having returned GBP450 million to shareholders during 2014 following the sale of its healthcare business.
The group reported a statutory pretax profit of GBP343 million for 2014 from its continuing operations, compared with a GBP339 million profit in 2013. Sales were down 3% on a reported basis at GBP3.83 billion, but were up 4% at constant currency rates. Beverage can volumes grew 4% during the year, driven by good organic growth in all regions except North America, especially a market share boost in Brazil from the 2014 FIFA World Cup.
However, the group said its underlying operating profit from continuing operations was down at GBP418 million, from GBP449 million in 2013, as adverse currency movements and higher aluminum premium costs more than offset a one-off indirect tax benefit in Brazil.
"In a difficult year, we delivered a good performance. It has been a great team effort in the face of unprecedented rises in metal premiums, the impact of foreign currency translation and some pricing pressure," said Chief Executive Graham Chipchase in the statement.
Looking forward, Chipchase said its will be a "tough trading environment" in 2015.
"We expect 2015 to present a tough trading environment with headwinds from metal premium, foreign exchange volatility and pricing pressure. However, we are taking steps to address these through further improvements in productivity to make sure we are delivering cost leadership and continuing to invest in growth capacity to enhance our strong market positions," he said.
The group said it is also taking steps to cut its cost base in Europe.
By Rowena Harris-Doughty; rowenaharrisdoughty@alliancenews.com; @rharrisdoughty
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