Ball Eyes Up Rexam in Can Deal

09 Feb 2015 --- British can maker Rexam, the world’s second largest can maker, has confirmed that it is in talks with US firm Ball Corporation for its takeover, in a possible deal worth £4.3bn. Confirmation of the recent media speculation saw shares in Rexam jump 24% to 557p/share.

Ball, the world’s largest can maker, has made an offer of 610p per share, which values its rival at much higher than its current value. Both companies stand to gain significantly if the deal goes ahead, with Rexam dominating in Europe and Ball in the US. However, Ball does business in China, which Rexam would benefit from as it is currently not in that market, and Rexam is strong in Russia and the Middle East. It is expected, that if the deal goes ahead, both firms would be required to shed some of their business in both the US and Europe due to competition regulations. Currently, the combined market share of both companies is 70% is Europe and 60% in the US.

Rexam said in its statement: “The proposal values Rexam at 610 pence per each Rexam share based on a consideration of approximately two thirds in cash and one third in new Ball shares. 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,” the statement said. Ball has to make a formal offer on or before 5 March, and some analysts have speculated that as a price has already been named, the merger is likely to go ahead.

Employing around 8,000 people worldwide, and making some 62bn cans per year, Rexam has spent the last five years streamlining its business to become more efficient and focussed. This involved selling its plastics arm.

There has been much recent consolidation activity in the packaging industry. Last month FoodIngredientsFirst reported that RockTenn and MeadWestVaco are to merge, creating a global packaging giant worth $16bn.