Why Ball Shares Are Shooting Higher Today

Ball Corp BALL shares are trading higher by around 5% after the company disclosed a plan to sell its aerospace business.

The company inked an agreement to sell its aerospace business to BAE Systems for gross proceeds of $5.6 billion in cash.

The price represents 19.6x Ball Aerospace's LTM comparable EBITDA (as of June 30, 2023).  

The transaction is expected to close in H1 2024, subject to regulatory approvals and customary closing conditions.

Post deal closure, the company aims to use the combination of around half of the (after-tax) proceeds of around $4.5 billion and strong FCF from the packaging operations to reduce net debt to pro forma expected Fy23 comparable EBITDA to about 3.0x, the low-end of the long-term leverage range. 

Ball also plans to boost its share repurchase authorization program and quarterly dividend. 

"Following the successful closing of today's transaction, Ball Corporation's improved balance sheet strength and flexibility, highly cash generative packaging businesses and our team's cost-efficient ownership mindset provide an excellent equation for increasing the return of value to shareholders, maximizing value from our existing operations, and investing in our future growth through the lens of EVA." said Daniel W. Fisher, chairman and chief executive officer.

Earlier this month, BALL reported Q2 adj. EPS of $0.61, beating the consensus of $0.60, and sales of $3.57 billion, missing the consensus of $3.84 billion.

As of June 30, 2023, cash and cash equivalents stood at $955 million. 

Price Action: BALL shares are trading up 5.30% at $57.40 premarket on the last check Thursday.