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Offer for Rexam PLC

Regulatory Case

About the Transaction

On Feb. 19, 2015, Ball Corporation announced an offer to acquire Rexam PLC that would create a global metal packaging and aerospace technologies company with approximately $15 billion in revenues, capable of leveraging geographic presence, innovative products and talented employees to better serve customers around the world.

As the proposed acquisition continues to move forward, there are some important things to note about the transaction.

First, this proposed acquisition has a variety of benefits for customers. In fact, customers are at the heart of the transaction. As a result of the acquisition, the combined organization will be able to better serve customers, large and small, through supply chain efficiencies, shared manufacturing excellence and increased product innovation – and all on an enlarged geographic platform.

Second, value will be created through realizing cost saving synergies and process efficiencies. Specifically, the combination of the two organizations will provide $300 million of annual run-rate synergies by the end of year three of combined operations. These synergies will be realized in the areas of general and administrative costs, sourcing, freight and logistics, shared best practices and other efficiency savings.

Finally, while the transaction will create many benefits for customers, the global metal packaging marketplace will continue to evolve and thrive. This means that customers will continue to have a variety of competitive options for their metal packaging needs. Here’s how:

  • Ball and Rexam have largely complementary geographical footprints, and even where there is local overlap in Europe, the United States and Brazil it is not always in the same areas. And, due to freight and logistics costs, local customer footprints are more relevant than global footprints. Cans are made locally and sold locally, as freight costs generally make it prohibitive to ship more than a few hundred miles.
  • The metal packaging industry is very dynamic and customers have various options when it comes to their metal beverage packaging needs. For example, in the United States, approximately 80 percent of Ball and Rexam’s business comes from four, powerful global brand customers. It is not much different in Europe, where roughly 75 percent of Ball and Rexam’s business comes from just five global brand customers. These customers have demonstrated the ability to self-make their own metal beverage packaging in many parts of the world, including North America, and sponsor entry of new beverage can makers. As a result, as we have seen in numerous parts of the world, it’s highly likely that new beverage can manufacturing companies will continue to enter the industry.
  • Material substrate substitution is an ongoing feature of the packaging industry. Companies regularly evaluate their product packaging and often make changes to substitute one material, like plastic, for another, like metal. This creates a dynamic industry with shifting needs and increased competition.

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