Regulatory Review Process for the Sale of Ball Aerospace Completed

Rhea-AI Summary

Ball Corporation (BALL) announces the U.S. Department of Justice's approval for the sale of its aerospace business to BAE Systems, Inc. for $5.6 billion, after receiving other regulatory clearances. The transaction is expected to close soon.

Insights

Financial Analyst

The conclusion of the Department of Justice's review regarding Ball Corporation's sale of its aerospace division to BAE Systems marks a pivotal moment for the company. The transaction's value at approximately $5.6 billion in cash proceeds represents a significant liquidity event for Ball Corporation. This infusion of capital could be redirected towards strategic investments, debt reduction, or shareholder returns. The aerospace sector has been a high-margin business and this divestiture will streamline Ball's focus on its core sustainable aluminum packaging operations. Investors will be keen to analyze the post-transaction financial metrics, such as earnings per share and return on invested capital, to gauge the impact on Ball's financial health and performance.

Legal Expert

The expiration of the Hart-Scott-Rodino Act review period without action from the Department of Justice is a green light for Ball Corporation's strategic divestiture. This indicates that the transaction did not raise significant antitrust concerns, which is noteworthy given the current regulatory environment where scrutiny of mergers and acquisitions is heightened. The involvement of top-tier legal and regulatory advisors underscores the complexity of the deal, particularly given the sensitive nature of aerospace and defense transactions. The successful navigation through various regulatory bodies, including the Committee on Foreign Investments in the United States, highlights the meticulous planning and compliance with national security considerations.

Market Research Analyst

The sale of Ball Corporation's aerospace business to BAE Systems aligns with industry trends where companies are seeking to sharpen their focus on core competencies. For Ball, this means doubling down on the sustainable aluminum packaging market, which is expected to grow due to increasing consumer and regulatory demand for eco-friendly packaging solutions. The deal could enhance Ball's competitive position in this space by providing additional resources to invest in innovation and capacity expansion. Investors and competitors alike will be monitoring how Ball reallocates the proceeds from the sale to drive growth in its packaging division and whether this strategic move will create long-term value.

WESTMINSTER, Colo., Feb. 14, 2024 /PRNewswire/ -- Ball Corporation (NYSE: BALL), the world's leading producer of sustainable aluminum packaging for global beverage and household brands, today announced that the U.S. Department of Justice has ended its review, and allowed its review period to expire, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 with respect to the announced sale of Ball's aerospace business to BAE Systems, Inc. for approximately $5.6 billion in cash proceeds. With the earlier receipt of other regulatory approvals and clearances for closing this transaction, including the Defense Counterintelligence and Security Agency and the Committee on Foreign Investments in the United States, the parties expect to close the transaction in the near term, subject to the satisfaction or waiver of the remaining customary closing conditions.

Morgan Stanley & Co. LLC served as Ball Corporation's financial advisor. Skadden, Arps, Slate, Meagher and Flom LLP and Axinn Veltrop and Harkrider LLP served as Ball Corporation's legal and regulatory advisors for the transaction.

About Ball Corporation
Ball Corporation supplies innovative, sustainable aluminum packaging solutions for beverage, personal care and household products customers. Ball Corporation and its subsidiaries employ 21,000 people worldwide and reported 2023 net sales of $14.03 billion. For more information, visit www.ball.com, or connect with us on Facebook or Twitter.

Forward-Looking Statement
This release contains "forward-looking" statements concerning future events and financial performance. Words such as "expects," "anticipates," "estimates," "believes," and similar expressions typically identify forward looking statements, which are generally any statements other than statements of historical fact. Such statements are based on current expectations or views of the future and are subject to risks and uncertainties, which could cause actual results or events to differ materially from those expressed or implied. You should therefore not place undue reliance upon any forward-looking statements, and they should be read in conjunction with, and qualified in their entirety by, the cautionary statements referenced below. Ball undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Key factors, risks and uncertainties that could cause actual outcomes and results to be different are summarized in filings with the Securities and Exchange Commission, including Exhibit 99 in Ball's Form 10-K, which are available on Ball's website and at www.sec.gov. Additional factors that might affect: a) Ball's packaging segments include product capacity, supply, and demand constraints and fluctuations and changes in consumption patterns; availability/cost of raw materials, equipment, and logistics; competitive packaging, pricing and substitution; changes in climate and weather and related events such as drought, wildfires, storms, hurricanes, tornadoes and floods; footprint adjustments and other manufacturing changes, including the startup of new facilities and lines; failure to achieve synergies, productivity improvements or cost reductions; unfavorable mandatory deposit or packaging laws; customer and supplier consolidation; power and supply chain interruptions; changes in major customer or supplier contracts or loss of a major customer or supplier; inability to pass through increased costs; war, political instability and sanctions, including relating to the situation in Russia and Ukraine and its impact on Ball's supply chain and its ability to operate in Europe, the Middle East and Africa regions generally; changes in foreign exchange or tax rates; and tariffs, trade actions, or other governmental actions, including business restrictions and orders affecting goods produced by Ball or in its supply chain, including imported raw materials; b) Ball's aerospace segment include funding, authorization, availability and returns of government and commercial contracts; and delays, extensions and technical uncertainties affecting segment contracts; failure to obtain, or delays in obtaining, required regulatory approvals or clearances for the proposed transaction; any failure by the parties to satisfy any of the other conditions to the proposed transaction; the possibility that the proposed transaction is ultimately not consummated; potential adverse effects of the announcement or results of the proposed transaction on the ability to develop and maintain relationships with personnel and customers, suppliers and others with whom it does business or otherwise on the business, financial condition, results of operations and financial performance; risks related to diversion of management's attention from ongoing business operations due to the proposed transaction; the impact of the proposed transaction on the ability to retain and hire key personnel; and c) Ball as a whole include those listed above plus: the extent to which sustainability-related opportunities arise and can be capitalized upon; changes in senior management, succession, and the ability to attract and retain skilled labor; regulatory actions or issues including those related to tax, environmental, social and governance reporting, competition, environmental, health and workplace safety, including U.S. Federal Drug Administration and other actions or public concerns affecting products filled in Ball's containers, or chemicals or substances used in raw materials or in the manufacturing process; technological developments and innovations; the ability to manage cyber threats; litigation; strikes; disease; pandemic; labor cost changes; inflation; rates of return on assets of Ball's defined benefit retirement plans; pension changes; uncertainties surrounding geopolitical events and governmental policies, including policies, orders, and actions related to COVID-19; reduced cash flow; interest rates affecting Ball's debt; successful or unsuccessful joint ventures, acquisitions and divestitures, and their effects on Ball's operating results and business generally; and potential adverse effects of the announcement or results of the proposed transaction on the market price of Ball Corporation's common stock.

 

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SOURCE Ball Corporation

FAQ

What is the total cash proceeds for the sale of Ball Corporation's aerospace business to BAE Systems, Inc.?

The total cash proceeds for the sale of Ball Corporation's aerospace business to BAE Systems, Inc. is approximately $5.6 billion.

Which regulatory approvals were required for closing the transaction?

The regulatory approvals required for closing the transaction included the U.S. Department of Justice, Defense Counterintelligence and Security Agency, and the Committee on Foreign Investments in the United States.

Who served as Ball Corporation's financial advisor for this transaction?

Morgan Stanley & Co. LLC served as Ball Corporation's financial advisor for this transaction.

Who were the legal and regulatory advisors for Ball Corporation in this transaction?

Skadden, Arps, Slate, Meagher and Flom LLP and Axinn Veltrop and Harkrider LLP served as Ball Corporation's legal and regulatory advisors for this transaction.