Sonoco swoops for Ball Metalpack in US$1.3B tinplate steel mega-deal

03 Jan 2022 --- Sonoco has agreed to acquire Ball Metalpack, a leading metal packaging manufacturer for food and household products and reportedly the largest aerosol producer in North America, for US$1.35 billion in cash. 

Ball Metalpack is a joint venture owned by Platinum Equity (51%) and Ball Corporation (49%). The business was formed in 2018 and is headquartered in Broomfield, Colorado, US.

The tinplate steel packaging and closures producer was projected to generate approximately US$850 million in revenue and US$111 million of adjusted EBITDA in 2021.

“This acquisition fits our strategy of investing in Sonoco’s core businesses as it complements our largest Consumer Packaging franchise – our iconic global Paper Cans and Closures business,” notes Howard Coker, Sonoco’s president and CEO.

“In addition, it further expands our already established sustainable packaging portfolio with metal packaging, which is the most recycled packaging substrate in the US.”

Cash flow boost
Sonoco has enjoyed a long relationship with Ball Metalpack, including owning and operating two of its manufacturing facilities in Canton, Ohio, US.

The diversified consumer packaging giant indicates the acquisition will strengthen its stable cash flow generation while driving solid earnings accretion. Ball Metalpack boasts a comprehensive and product portfolio that has received recent investments in new technology and capacity.Ball Metalpack was projected to generate approximately US$850 million in revenue in 2021.

“The joint venture sale is a positive move, and cash proceeds received from Ball’s minority interest will further benefit our shareholders,” says John A. Hayes, Ball Corporation’s chairman and CEO.

“This agreement further enhances Ball’s ability to return value to shareholders via share buybacks and dividends, and to make EVA enhancing investments.”

Platinum Equity partner Louis Samson adds: “Ball Metalpack has undergone a meaningful transformation over the past three years and is now ready to start a new chapter.”

“We made substantial investments in equipment, technology and human capital, so the business is very well positioned for continued growth, and we believe Sonoco is the ideal home going forward.”

Peterson stays on
After closing the transaction, Sonoco anticipates the acquired business’ financial results will be reported in the company’s Consumer Packaging segment.

Jim Peterson, who is CEO of Ball Metalpack and has more than 15 years of leadership experience in the metal packaging industry, will continue to lead the business along with a tenured management team with more than 90 years of experience.

There are no expected changes in operations or customer relationships due to the transaction.

The transaction is subject to customary closing conditions, including regulatory review, and expected to be completed in the first quarter of 2022.US President Joe Biden has “hit pause” on the US-EU aluminum and steel trade war.

US-EU metal tariff deal
In related news, a new EU and US alliance could have wide-reaching ramifications for the metal packaging industry after political leaders announced they would be “hitting pause” on an aluminum and steel trade war that has raged since 2018 under the Trump presidency.

During the G20 Rome Summit, US President Joe Biden and European Commission President Ursula von der Leyen agreed to suspend current tariff measures in “a new milestone in the transatlantic relationship.”

According to both parties, decarbonizing aluminum and steel production will be the agreement’s chief aim. The partners stress cooperating on reducing the use of “dirty steel” – a reference to Chinese production practices – is essential to achieving the Paris Agreement’s carbon neutrality by 2050 goal.

However, US and EU aluminum associations are “very concerned” the recent agreement to renegotiate transatlantic metal tariffs could result in “even more trade distortion and additional market instability.”

Currently, China maintains a global monopoly on aluminum and steel, which it usually produces through iron and coking coal. US and EU governments also accuse China of illicit dumping practices – something it vehemently denies.

Meanwhile, Europe’s steel packaging recycling rate has reached a record high 84%, according to figures issued by the Association for European Producers of Steel for Packaging.

By Joshua Poole

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