Ball Corporation obtains regulatory clearance for Rexam

Ball Corporation BLL announced that the European Commission has granted regulatory clearance in Europe related to its proposed acquisition of Rexam PLC, subject to the divestment of 12 plants in the European Economic Area ("EEA"). Ten of these plants manufacture can bodies, while the other 2 produce can ends.

In early 2015, Ball Corporation had confirmed its offer to acquire Rexam. The pending acquisition of Rexam for a cash and stock deal valued at $8.4 billion (£5.4 billion) will create the world's largest consumer packaging supplier.

Rexam and Ball Corporation are, respectively, the first and second largest beverage can manufacturers in the EEA as well as the two market leaders worldwide. Ball Corporation was facing hurdles from its shareholders and regulatory bodies on the concern that the acquisition will impede effective competition in the consumer packaging market.

Regarding this, the European Commission opened an in-depth inquiry to assess whether the proposed transaction will reduce competition in the beverage can and aluminum bottle manufacturing industry in the EEA.

The investigation revealed that the transaction would have significantly reduced competition for customers. Can-Pack Group and Crown Holdings Inc.(CCK) are the only remaining major players in Europe which would not have created sufficient competitive pressure on the merged entity.

In order to address the commission's concerns, Ball Corporation submitted commitments to divest 10 can body plants and 2 can end plants located within the EEA. Per the conditions, Ball Corporation will have to divest 8 of its existing European metal beverage can manufacturing plants and 2 end plants, along with 2 of Rexam's metal beverage can manufacturing plants. The European Commission also requires Ball Corporation to divest certain European innovation and support functions in Bonn, Germany, Chester, U.K. and Zurich, Switzerland.

In addition, Ball Corporation plans to move its European regional support office to Rexam's Luton, U.K., location and will retain Rexam's Tongwell, U.K., research and development center. The business to be divested will have a total manufacturing capacity in the EEA of over 18 billion cans.

Upon completion of the proposed offer for Rexam, the combined company will operate Rexam's remaining 13 European beverage can manufacturing plants and 2 end plants, as well as 3 Rexam can plants and 1 end plant in Russia, and Ball Corporation's Bierne, France, Belgrade, Serbia, and Lublin, Poland, manufacturing plants.

The buyout will allow Ball Corporation to further leverage, simplify and streamline its business in Brazil, as well as across the broader metal beverage business. The company expects to obtain the remaining regulatory clearances to enable the proposed acquisition of Rexam to close during the first half of 2016.