Ball Corporation Acquires Aerocan - Analyst Blog

Announced in December 2010, Ball Corporation (BLL) has completed the acquisition of Aerocan SAS from Barclays Private Equity for approximately 221 million euros ($293 million), including assumption of debt and other liabilities.

Aerocan is an European manufacturer and the largest supplier of aluminum aerosol cans and bottles as well as aluminum slugs (raw material in the production of cans). Further, the company caters to diverse sectors like personal care, pharmaceutical, health, beverage and food industries. It operates three aerosol can manufacturing plants across Europe – in the Czech Republic, France and United Kingdom. It also owns a 51% interest in a joint venture aluminum slug plant in France.

Ball Corporation now expects the after-tax returns from Aerocan to exceed Ball Corporation's return requirements and to broaden its metal packaging product line. Ball Corporation is confident that Aerocan will fit into its Metal Packaging Growth Platform, and will provide opportunities to new and existing customers.

Moreover, the acquisition is expected to broaden Ball Corporation's presence in a growth market. In addition, this Aerocan deal will strengthen Ball Corporation's exposure to the European can market and also boost its international sales.

The current acquisition is similar to Ball Corporation's purchase of Austria-based Neuman Aluminum, a global manufacturer of high-quality aluminum slugs. The Neuman Aluminum acquisition has enhanced Ball Corporation's metal forming technology and its packaging platform with expectations of being accretive in its first year of operation.

Following the acquisition, Neuman Aluminum was integrated into Ball Corporation's metal food and household products packaging segment. The segment manufactures metal container products used primarily in food packaging at operations in the U.S. and Canada.

Ball Corporation generated huge cash flows in the third quarter of 2010 and the company expects to produce $500 million in cash flow for full-year 2010. Ball Corporation intends to aggressively deploy its free cash toward acquisitions.

In the third quarter, the company disclosed its plans to install the second production line in North America to produce Alumi-Tek bottles. The company also announced the consolidation of its salmon can production in the beginning of fiscal 2011, which is expected to bring $8 million cash benefits to the company.

Broomfield, Colorado-based Ball Corporation is a manufacturer of metal and plastic packaging, primarily for beverages and foods. It also supplies aerospace and other technologies and services to government and commercial customers. Ball Corporation competes with Alcoa Inc. (AA) and Rexam plc (REXMY). The company is currently allotted a Zacks #3 Rank (short-term Hold recommendation) on the stock.

 
ALCOA INC (AA): Free Stock Analysis Report
 
BALL CORP (BLL): Free Stock Analysis Report
 
REXAM PLC-ADR (REXMY): Free Stock Analysis Report
 
Zacks Investment Research