Ball to sell Chinese beverage packaging facilities in US$225m deal
14 Dec 2018 --- Ball Corporation will sell its metal beverage packaging facilities in China to ORG Technology Co. Ltd., a Chinese metal packaging company. The deal is estimated at US$225 million total transaction consideration including cash, plus potential additional consideration related to the relocation of an existing facility over the next several years. The company currently expects this to be in the range of US$50 million to US$75 million. The transaction is subject to customary regulatory approvals and is expected to close during the second half of 2019.
“This arrangement allows each party to leverage its own geographic strengths, while allowing Ball to continue our disciplined approach to capital allocation by freeing up capital that does not generate our required returns," says John A. Hayes, Chairman, President and CEO.
Ball will continue to serve the demand for sustainable aluminum beverage packaging in other parts of Asia from its wholly owned Myanmar facility and joint ventures located in Vietnam, Thailand, South Korea and Taiwan.
Assets included in the sale are beverage can and end plants in Beijing, Foshan, Hubei and Qingdao, China. As part of the transaction, Ball will also license its beverage can and end technology to ORG in China, and reinvest approximately US$50 million, largely from the anticipated relocation proceeds, in ORG's shares. The companies have agreed to cooperate on future commercial opportunities with mutual customers by leveraging the expertise of ORG in China and Ball in the markets it serves.
Proceeds from the sale will support Ball's ongoing global growth initiatives and multi-year share repurchase program. Today's announcement will have an immaterial effect on Ball's 2019 goals of US$2 billion of comparable EBITDA and free cash flow in excess of US$1 billion, the company shares.
Goldman Sachs & Co. LLC is serving as financial advisor to Ball Corporation, and Skadden, Arps, Slate, Meagher & Flom LLP is serving as Ball Corporation's legal counsel.
Earlier this year, Ball announced that it would cease production at its beverage packaging plant in San Martino, Italy, at the end of 2018, following due negotiation with the trade union. Soon after, Ball inaugurated a new production plant in Spain located in Cabanillas del Campo, Guadalajara, near Madrid. With this new factory, which represents for Ball a significant investment of more than €100 million (US$116 million), the company expands its presence in Spain, where it already has another production facility located in La Selva del Camp, Tarragona.
