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Offer for Rexam PLC

In the News

“Anheuser-Busch InBev’s recent capital expansions in aluminum can manufacturing support the parties’ position that self-supplying customers constrain industry pricing…Anheuser-Busch InBev’s (ABI) recent announcements about its plans to expand capacity in several US can-making facilities as well as its intention to build a can manufacturing plant to service its new Yucatan, Mexico brewery, among others, demonstrate that self-supply is not just theoretical. ABI has explained its expansion decisions as a means to produce cans at a lower price than the price at which it is currently purchasing…Although the objective of the expansions is to reduce production costs, the locations of ABI’s new plants are not surprising. The Missouri location is a 15-mile drive from ABI’s flagship brewery in St. Louis, while ABI’s Jacksonville brewery and can manufacturing plants are only 10 miles apart. Its Mexican subsidiary, Grupo Modelo, announced in January that it would be opening a brewery in the same Yucatan municipality where the can plant is now slated for construction. Not surprisingly, the freight savings as a result of the proximity of the can plant to the brewery are significant.”

“Excess capacity created by self-supply could benefit smaller customers… The added capacity to the North American aluminum can market is likely to result in independent can makers lowering their prices to all customers in order to keep their plants operating at an efficient level of capacity.”
- Ball/Rexam: Recent Examples of Self-Supply Support Ball’s Position, But Significant Divestitures Remain Likely, Capitol Forum, July 10, 2015

“Antitrust regulators often balk at deals if there are just three big competitors. But in this case, the beer companies themselves make cans, and in some cases sell them. Anheuser Busch InBev's Metal Container Corp makes 45 percent of the cans needed for its U.S. production, and sells to PepsiCo and Coca-Cola, according to the beer maker's website. MillerCoors owns 50 percent of can maker Rocky Mountain Metal Corp, while Ball owns the other 50 percent.”
- Ball, Rexam merger's antitrust approval likely in the can – experts, WestlawNext/Reuters, Diane Bartz, March 12, 2015

“The two companies' drive to create a global player with a presence in most major regions comes at a time when major beer groups such as SABMiller PLC and Anheuser-Busch InBev NV operate globally following their own period of consolidation as do soft drinks suppliers. Coke and SABMiller agreed to combine their soft-drink bottling operations in southern and eastern Africa last November. The combination of Ball and Rexam is likely a response to this consolidation, creating a company that can better cater for customers than its predecessor firms, which were both under-represented in some regions, said Jefferies analyst Sandy Morris.”
- Ball Corp. Rolls Up Rexam With Sweetened $6.7 Billion Offer, Wall Street Journal, Rory Gallivan, Feb. 19, 2015

“The deal is expected to create an industry giant that can better manage capital spending and costs as aluminum premiums rise. Can makers currently have to contend with record-high aluminum premiums and the cost of getting the metal out of storage is anticipated to peak again by mid-2015.”
- Ball Corporation In $6.85B Sweetened Deal To Acquire Rexam PLC, Value Walk, Feb. 19, 2015

“A deal would make strategic sense because of complementary manufacturing footprints. Rexam, which produces about 60bn cans a year for drinks companies including PepsiCo, AB InBev and Carlsberg, is strong in emerging markets such as Russia and India, while Ball has a presence in China, Vietnam and Myanmar.”
- Rexam agrees £4.3bn offer from US rival Ball, Financial Times, Tanya Powley, Feb. 19, 2015