Ball Corporation will contribute its US steel food and aerosol packaging manufacturing assets to the joint venture. These include the following tinplate steel assets: Canton (Brookline and Warner Road) and Columbus, OH; Milwaukee and Deforest, WI; Chestnut Hill, TN; Horsham, PA; Springdale, AR; and Oakdale, CA. In 2017, these US tinplate steel assets had sales of $746 million and comparable operating earnings of $48 million. Jim Peterson, who currently manages those assets, will act as CEO of the joint venture.
In return, Ball Corporation will receive more than $600 million in pre-tax proceeds from the transaction and will retain a 49% interest in Ball Metalpack, for a total value of approximately $675 million.
Ball Corporation will continue to wholly own and operate its aluminum aerosol packaging facilities in the US, Canada, Europe, India and Mexico, and its steel aerosol facilities in Argentina, as well as the Findlay, OH, metal packaging facility, which largely produces aluminum beverage containers. The Findlay, OH facility will continue to produce two-piece steel food cans for Ball Metalpack under a long-term supply contract.
“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,” said John A. Hayes, chairman, president and CEO.
“This agreement enhances our ability to immediately return additional value to shareholders via share repurchases, reduce Ball’s leverage and grow EVA dollars,” Hayes added. “More than half of the proceeds from today’s announcement will be used to repurchase stock, increasing the 2018 share buyback to be in the range of $675 million by year end. Our 2019 financial goals of $2 billion of comparable EBITDA and free cash flow in excess of $1 billion remain unchanged, although they will be slightly more challenging to achieve following the sale of these assets and its related earnings and cash flow.”
Ball expects the US steel asset sale and joint venture transaction to close in July 2018 with approximately 1,300 employees transferring from Ball to the joint venture.