Ball partners with Platinum Equity in US$675m deal to form Ball Metalpack
26 Jun 2018 --- Ball Corporation and Platinum Equity have entered into a joint venture and definitive purchase agreement to form Ball Metalpack, a new packaging company that manufactures steel containers for aerosol products, food, household consumables, pet food, nutritional and other products in the US. Platinum Equity will own 51 percent of Ball Metalpack and Ball Corporation will own 49 percent.
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 Rd.) and Columbus, Ohio; Milwaukee and Deforest, Wisconsin; Chestnut Hill, Tennessee; Horsham, Pennsylvania; Springdale, Arkansas, and Oakdale, California. In 2017, these US tinplate steel assets had sales of $746 million and comparable operating earnings of US$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 US$600 million in pre-tax proceeds from the transaction and will retain a 49 percent 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, Ohio, metal packaging facility, which largely produces aluminum beverage containers. The Findlay, Ohio 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,” says 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. 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.”
Platinum Equity is a global private equity firm with $13 billion of assets under management and a highly specialized focus on business operations. The firm has substantial packaging expertise and more than 20 years' experience in acquiring and operating businesses that have been part of large corporate entities. Platinum Equity previously owned BWAY, a North American manufacturer of rigid metal and plastic containers. During Platinum Equity's ownership, BWAY's EBITDA grew 45 percent through a combination of operational improvements and growth initiatives.
“Platinum has a lot of experience in this sector, and our M&A&O playbook is proven to drive earnings growth and create value,” said Platinum Equity Partner Louis Samson. “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.”
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. Post-close, Ball Metalpack's financial results will be reported in equity in results of affiliates within Ball's consolidated statements of earnings. Ball's global aluminum aerosol and Argentine tinplate steel aerosol businesses will be led by Stan Platek, vice president and general manager, and its financial results will be reported in the Other non-reportable segment.
Ball Corporation supplies sustainable packaging solutions for beverage, food and household products customers, as well as aerospace and other technologies and services primarily for the U.S. government. Ball Corporation and its subsidiaries employ 18,300 people worldwide and reported 2017 net sales of $11 billion.
Platinum Equity was founded in 1995 by Tom Gores and is a global investment firm with $13 billion of assets under management and a portfolio of more than 30 operating companies that serve customers around the world. The firm is currently investing from Platinum Equity Capital Partners IV, a $6.5 billion global buyout fund. Platinum Equity specializes in mergers, acquisitions and operations – a trademarked strategy it calls M&A&O – acquiring and operating companies in a broad range of business markets, including manufacturing, distribution, transportation and logistics, equipment rental, metals services, media and entertainment, technology, telecommunications and other industries. Over the past 23 years Platinum Equity has completed more than 200 acquisitions.
