Ball Corporation enters joint venture with Platinum Equity

Household and food product packaging supplier, Ball Corporation (Ball), agrees to sell its steel aerosol assets as it forms a partnership with global investment firm, Platinum Equity.

Along with forming the alliance, the duo has made definitive purchase agreements to create a new packaging organisation.

The soon-to-be-launched company, which will be named Ball Metalpack, will produce steel containers for aerosol products and other items including household, food, pet food and nutritional items for the US marketplace.

Details of the deal

The partnership will see Platinum Equity own 51% of Ball Metalpack and Ball will possess 49%. Ball purchased its share for a total value of around $675 million (€578 million), it reported in a recent press release. Ball will also gain over $600 million (€514 million) in pre-tax proceeds.

As part of the agreement, Ball will provide its US-based steel food and aerosol packaging manufacturing assets to the new venture. Ball will commit to providing its tinplate steel assets in areas throughout the US including Ohio, Wisconsin, Tennessee, Pennsylvania, Arkansas and California.

Ball reported tinplate steel assets of $746 million (€639 million) in 2017, with operating earnings totalling $48 million (€41 million).

The company will continue its current global operations and will fully retain and operate its aluminium aerosol packaging facilities located in the US, Mexico, Canada, Europe and India. It will also remain the owner of its steel aerosol facilities in Argentina, along with its metal packaging facility in Ohio, the US.

Entering into partnership

Reflecting on the innovative and sustainable packaging provider’s relationship and new venture with Platinum Equity, John Hayes, chairman, president and CEO, shared: "We have a long-standing relationship with the Platinum Equity team. They have created tremendous value in the packaging sector, our management knows them well and we are confident they are the ideal partner. The upfront cash proceeds and our retained stake in the joint venture company will benefit Ball shareholders.”

Commenting on the potential for future growth that this partnership creates, Hayes added: "This agreement enhances our ability to immediately return additional value to shareholders via share repurchases, reduce Ball's leverage and grow EVA dollars.”

Achieving 2019 objectives

The company’s CEO revealed that over half of the proceeds of the venture will be used to “repurchase stock, increasing the 2018 share buyback to be in the range of $675 million (€578 million) by year-end”.

As Ball moves towards attaining its 2019 financial goal of reaching $2 billion (€1.7 billion) of comparable EBITDA and free cash flow of over $1 billion (€856.8 million), Hayes noted that while these objectives are still in place, “they will be slightly more challenging to achieve following the sale of these assets and its related earnings and cash flow”.

"We are excited to partner with Ball Corporation and the Ball Metalpack management team headed up by Jim Peterson, and are confident that together we'll deliver for customers and shareholders alike,” Louis Samson, Partner, Platinum Equity, added.

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