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Ball Acquires Rexam and Sells Divestment Business

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Jul. 1 2016, Published 2:12 p.m. ET

Ball’s price movement

Ball Corporation (BLL) has a market cap of $10.3 billion. Its stock rose by 1.3% to close at $72.29 per share on June 30, 2016. The stock’s weekly, monthly, and YTD (year-to-date) price movements were -1.7%, 0.51%, and -0.23%, respectively, on the same day. BLL is trading 0.24% below its 20-day moving average, 0.27% below its 50-day moving average, and 4.6% above its 200-day moving average.

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Related ETF and peers

The Vanguard Mid-Cap ETF (VO) invests 0.28% of its holdings in Ball Corporation. The ETF tracks the CRSP US Mid Cap Index, a diversified index of US mid-cap companies. The YTD price movement of VO was 3.6% on June 30.

The market caps of Ball’s competitors are as follows:

  • Boeing (BA): $82.7 billion
  • Alcoa (AA): $12.2 billion
  • Crown Holdings (CCK): $7.1 billion

Ball acquires Rexam

Ball Corporation has completed the acquisition of Rexam for ~$6.1 billion of cash and equity and the assumption of ~$2.4 billion of net debt. This acquisition makes the company the largest manufacturer of beverage cans in the world. The company has also sold its divestment business to Ardagh Group for cash proceeds of ~$3.1 billion at closing.

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Ball’s performance in fiscal 1Q16

Ball reported fiscal 1Q16 net sales of $1,756.0 million, a fall of 8.7% compared to net sales of $1,923.0 million in fiscal 1Q15. Sales of metal beverage packaging in the Americas & Asia, metal beverage packaging in Europe, metal food and household products packaging, and aerospace and technologies fell 8.4%, 6.1%, 7.8%, and 16.3%, respectively, in fiscal 1Q16 from fiscal 1Q15. The company reported business consolidation and other activities expenses of $267.0 million, compared to $52.0 million in fiscal 1Q15.

Its net income and EPS (earnings per share) fell to -$127.0 million and -$0.90, respectively, in fiscal 1Q16 from $28.0 million and $0.15, respectively, in fiscal 1Q15.

In fiscal 1Q16, Ball’s cash and cash equivalents and inventories fell 10.5% and 7.5%, respectively, compared to fiscal 1Q15. Its current ratio fell to 1.0x, and its long-term DE (debt-to-equity) ratio rose to 5.0x, compared to current and long-term DE ratios of 1.2x and 2.7x, respectively, in fiscal 1Q15.

In the final part of this series, we’ll discuss The Hershey Company.

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