Ball Corp. spins steel container division into joint venture

BROOMFIELD — Ball Corp. (NYSE:BLL) and Platinum Equity have entered into joint venture and definitive purchase agreements 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 United States. Platinum Equity will own 51 percent of Ball Metalpack and Ball Corp., based in Broomfield, will own 49 percent.

Ball Corp. will contribute its U.S. 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, Ohio; Milwaukee and Deforest, Wis.; Chestnut Hill, Tenn.; Horsham, Penn.; Springdale, Ark., and Oakdale, Calif. In 2017, these U.S. 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 Corp. will receive more than $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.

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Ball will continue to wholly own and operate its aluminum aerosol packaging facilities in the U.S., 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 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. 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.”

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 acquiring and operating businesses that have been part of large corporate entities..

Ball expects the U.S. steel asset sale and joint venture transaction to close in July 2018 with approximately 1,300 employees transferring from Ball to the joint venture.