Shares of Ball Corporation BLL gained around 1.5% to close at $73.82 yesterday, after the company received approval from Conselho Administrativo de Defesa Economica (“CADE”) regarding the proposed acquisition of Rexam PLC REXMY (Rexam). CADE granted final conditional regulatory clearance in Brazil for the deal.
In early 2015, Ball Corporation had confirmed its offer to acquire Rexam. The pending acquisition of Rexam for a cash and stock deal valued at $8.4 billion (£5.4 billion) will create the world's largest consumer packaging supplier.
Ball Corporation was facing hurdles from its shareholders and regulatory bodies on the concern that the acquisition will impede effective competition in the consumer packaging market. The regulatory commissions started thorough investigation.
In this connection, the European Commission opened an in-depth inquiry to assess whether the proposed transaction will reduce competition in the beverage can and aluminum bottle manufacturing industry in the European Economic Area (“EEA”). The Brazilian competition watchdog CADE also flagged concerns about the buyout.
Finally, CADE granted final conditional regulatory clearance in Brazil. Ball Corporation expects to obtain remaining regulatory clearances to enable the proposed acquisition of Rexam PLC to close during the first half of 2016.
Ball Corporation remains optimistic about the deal. It anticipates achieving net annual cost synergies in excess of $300 million in the third financial year of operations of the combined company, after successful completion and integration of the buyout.
Currently, Ball Corporation has a Zacks Rank #4 (Sell). Better-ranked stocks in the sector are Astec Industries, Inc. ASTE, Allegion Plc ALLE, both carrying a Zacks Rank #2 (Buy).
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