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Ball Corporation (BLL) Gets FTC's Final Nod for Rexam Buy

Zacks Equity Research

The supplier of metal packaging products, Ball Corporation BLL, confirmed that it has received a conditional approval of Federal Trade Commission (FTC) regarding its proposed acquisition of Rexam PLC REXMY. This clears the final regulatory clearance for the merger deal. Shares of Ball Corp. gained over 3% yesterday, to close at $70.60.

In early 2015, Ball Corporation had confirmed its offer to acquire Rexam for a cash and stock deal valued at $8.4 billion (£5.4 billion). The acquisition will create the world's largest consumer-packaging supplier. The merged company will be better positioned to serve the combined customer base through supply-chain efficiency, manufacturing excellence and increased product innovation.

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Ball Corporation received the final unconditional regulatory clearance in Brazil on Jun 8. Earlier in Jan, 2016, the European Commission (EC) had cleared the deal subject to the divestment of the company’s 12 plants. EC also required the company to dispose certain European innovations and support functions. Ball Corporation finally got the clearance from the European Commission on Jun 17 after fulfilling the conditions.

The FTC’s approval comes with a condition that requires Ball Corporation and Rexam to divest eight aluminum can plants and related assets in the U.S to Luxembourg-based Ardagh Group. Ardagh Group is one of the world’s largest producers of glass bottles for the beverage industry and metal cans for the food industry.

Upon completion of the proposed offer for Rexam, the combined company will operate 16 existing metal beverage packaging manufacturing plants in the U.S., Canada and Mexico alongwith its Rocky Mountain Metal Container joint venture in Golden, Colorado. The merged company will also operate Rexam's beverage can manufacturing plants in Phoenix, Arizona; Chatsworth, California; St Paul, Minnesota; Longview, Texas; Kent, Washington; and Queretaro, Mexico; end manufacturing plant in Birmingham, Alabama; and joint ventures in Amatitlan, Guatemala and Cristobal, Panama.

Further, the North and Central-America regional office and innovation center will be operated from Ball Corporation's existing Westminster, CO locations.

The buyout will allow Ball Corporation to further leverage, simplify and streamline its business in Brazil as well as across the broader metal beverage business. Following the closing of the transaction, Ball Corporation will remain a New York Stock Exchange-listed company domiciled in the U.S.

Currently, Ball Corporation has a Zacks Rank #3 (Hold).

Better-ranked stock in the sector include Greif, Inc. GEF and Silgan Holdings Inc. SLGN, both carrying a Zacks Rank #2 (Buy).

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