Ball Corporation Announces Agreement to Sell Aerospace Business to BAE Systems for $5.6 Billion

Strategic Insights -

Ball Corporation has reached an agreement to sell its aerospace business to BAE Systems for gross proceeds of $5.6 billion in cash. The transaction, which is subject to regulatory approvals and customary closing conditions and adjustments, is projected to close in the first half of 2024. The sale of the aerospace business is expected to create a focused, high-margin global aluminum packaging leader for Ball Corporation.

The transaction will enable Ball Corporation to reduce net debt to pro forma expected 2023 comparable EBITDA to approximately 3.0x, the low-end of the company's long-term leverage range. The company will utilize its share repurchase authorization programs and quarterly dividends to accelerate the return of value to shareholders. The precise timing and amount of repurchases and the opportunity to increase the dividend payout will be determined based on market conditions, timing of receipt of proceeds, and other factors.

Key Takeaways:

  • Ball Corporation has agreed to sell its aerospace business to BAE Systems for $5.6 billion in cash.
  • The transaction is subject to regulatory approvals and customary closing conditions and adjustments.
  • The sale of the aerospace business is expected to create a focused, high-margin global aluminum packaging leader for Ball Corporation.
  • The company will reduce net debt to pro forma expected 2023 comparable EBITDA to approximately 3.0x, the low-end of the company's long-term leverage range.
  • Ball Corporation will utilize its share repurchase authorization programs and quarterly dividends to accelerate the return of value to shareholders.
  • The combination of roughly half of the after-tax proceeds of approximately $4.5 billion and robust free cash flow generated from the company's packaging operations will be used to reduce net debt.
  • The transaction is projected to close in the first half of 2024.
  • Ball Aerospace has delivered fourfold growth and record levels of combined contracted and won-not-booked backlog.
  • The company expects to accelerate capital return to shareholders via share repurchases and dividends over a lower average invested capital base.

Statistics:

  • $5.6 billion: Gross proceeds from the sale of Ball Corporation's aerospace business.
  • $4.5 billion: After-tax proceeds from the sale of Ball Corporation's aerospace business.
  • 19.6x: Price represents Ball Aerospace's LTM comparable EBITDA (as of June 30, 2023).
  • 3.0x: Pro forma expected 2023 comparable EBITDA to approximately, representing the low-end of the company's long-term leverage range.
  • 2024: First half, the anticipated closing date of the transaction.
  • $15.35 billion: Ball Corporation's 2022 net sales.
  • 21,000: Number of people employed worldwide by Ball Corporation and its subsidiaries.

Sources:

  • (EDGAR Online via COMTEX) -- 0000009389false00000093892023-08-172023-08-17 Indiana 001-07349 35-0160610 (State of (Commission (IRS Employer Incorporation) File No.) Identification No.)
  • Ball Corporation Press Release dated August 17, 2023.