Ball Corporation is selling its aerospace business to BAE Systems to streamline its focus on developing low-carbon aluminium packaging and facilitating organic growth across its operations.
The business is being sold for gross proceeds of $5.6 billion in cash, representing 19.6x the LTM comparable EBITDA of Ball Aerospace as of 30th June 2023.
Approximately half of an estimated $4.5 billion in after-tax proceeds and robust free cash flow from the company’s packaging operations is set to reduce net debt to pro forma expected 2023 comparable EBITDA to around 3.0x. This is on the lower end of the company’s long-term leverage range, according to Ball.
As such, it believes that it will be well-positioned to accelerate capital return to shareholders by making use of share repurchase authorisation programmes and quarterly dividends over a lower average invested capital base – thus boosting the return of value.
Factors such as market conditions and timing of receipt of proceeds will determine the precise timing and amount of repurchases, as well as the opportunity to increase the dividend payout.
Morgan Stanley & Co. LLC is serving as Ball Corporation’s financial advisor, while Skadden, Arps, Slate, Meagher and Flom LLP and Axinn Veltrop and Harkrider LLP are serving as legal and regulatory advisors for the proposed transaction.
The transaction is subject to regulatory approvals and customary closing conditions and adjustments; it is expected to close in the first of 2024.
Chairman and chief executive officer Daniel W. Fisher said: “Following the successful closing of today’s transaction, Ball Corporation’s improved balance sheet strength and flexibility, highly cash generative packaging businesses and our team’s cost-efficient ownership mindset provide an excellent equation for increasing the return of value to shareholders, maximizing value from our existing operations, and investing in our future growth through the lens of EVA. Executing our strategy of enabling the greater use circular aluminum packaging on a global scale continues.
“Our acceleration of low-carbon, best-value aluminum packaging initiatives in the years to come will stimulate organic growth across our global packaging operations and improve the world for future generations. Our innovative portfolio of aluminum cans, bottles and cups for single-serve, refill, reuse and recloseable applications has untapped potential, and we look forward to unlocking that value and delivering sustainable compounding shareholder growth now and beyond.”
Following a webcast discussing the transaction at 9:00 MT on 17th August 2023, Ball Corporation emphasises that a replay and written transcript will be posted on its website under ‘News and Presentations’.
Wendel recently signed an agreement to sell Constantia Flexibles to an affiliate of One Rock Capital Partners at a price expected to yield net proceeds of approximately €1,097 million. It is said that the sale price will exceed Wendel’s total investment in Constantia Flexibles since 2015.
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