Ball Corporation · NYSE:BALL
Ball — Merger or Acquisition (February 2015)
33 slides from Ball's merger presentation, Feb 19, 2015
Slide 1: Acquisition of Rexam PLC
Acquisition of Rexam PLC February 19, 2015
Slide 2: Forward-looking statements
Confidential This presentation contains “forward-looking” statements concerning future events and financial performance. Words such as “expects,” “anticipates,” “estimates” and similar expressions identify forward-looking statements. Such statements are subject to risks and uncertainties, which coul
Slide 3: Solicitation material and additional information
Confidential 3 This presentation may be deemed to be solicitation material in respect of the proposed acquisition of Rexam PLC (“Rexam”) by Ball Corporation (“Ball”), including the issuance of shares of Ball common stock in respect of the proposed acquisition. In connection with the foregoing propos
Slide 4: Informational purposes only notice
Confidential This document is provided for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell, shares of Ball Corporation ("Ball") or Rexam PLC ("Rexam"). Further to the announcement by Ball of its offer to acquire the entire issued and to be issue
Slide 5: Presenters: John A. Hayes and Scott C. Morrison
Confidential John A. Hayes Chairman, President and CEO Scott C. Morrison Senior Vice President and CFO 5
Slide 6: Creation of Unique Global Metal Packaging Manufacturer
Confidential • Complementary global plant network and customer base • Strong cultural compatibility • Addresses evolving packaging industry dynamics • Significant value creation through realization of cost saving synergies and efficiencies • Enhanced free cash flow profile • Financially attractive t
Slide 7: Ball company facts and history
Confidential Founded: 1880 Employees: 14,500 Businesses: Metal packaging and Aerospace Headquarters: Broomfield, Colo. USA NYSE Listed: BLL: BLL What five brothers started more than 135 years ago, proudly continues today. A reputation for quality. A legend of service. A history of innovation. 7 Will
Slide 8: 10-year Ball Stock Performance vs. Key Indices
Confidential 10-year Ball Stock Performance vs. Key Indices Delivering quarterly cash dividends since 1973 8 -100% -50% 0% 50% 100% 150% 200% 250% Ball S&P 500 FTSE 100 +240% +74% +36% February 2005 February 2010 February 2015
Slide 9: Diverse Product Portfolio; Highly Cash Generative
Confidential 83% 10% 7% ~$15 billion Revenue Global Metal Beverage Global Metal Food & Household Aerospace 86% 9% 5% ~$2.4 billion Adjusted EBITDA* Diverse Product Portfolio; Highly Cash Generative 9 NOTE: Rexam financials converted to USD at 1.54x (USD / GBP) *includes estimated $300 million of ann
Slide 10: Customer logos
Confidential 10 These logos may be registered trademarks of their respective owners.
Slide 11: Benefits to customers, employees and communities
Confidential Enables Regional and Brand Mix Shift to Cans from Other Substrates Broadens Employee Career Opportunities Increases Access to Specialty Packages for All Customers Leverages Supply Chain Efficiencies Partners in Sustainability Serving Communities and Respecting the Environment 11
Slide 12: Aligns with Our Drive for 10 Strategic Levers
Confidential Maximizing value in our existing businesses Expanding into new products and capabilities Aligning ourselves with the right customers and markets Broadening our geographic reach Leveraging our know-how and technology expertise Aligns with Our Drive for 10 Strategic Levers Plant Efficienc
Slide 13: Fuels Our Financial Strategy and Increases EVA$
Confidential Fuels Our Financial Strategy and Increases EVA$® $264 $397 2010 2014 EVA$ represents ROIC greater than WACC EVA$ millions Over a Growing Invested Capital Base $4.3 billion $5.1 billion 13 Economic Value Added (EVA®) is the amount of return generated on the company’s average invested cap
Slide 14: Provides ~$300 million in Value Creating Synergies
Confidential 44% General and Administrative 22% Freight, Logistics and Warehousing 2% Best Practices Process and Efficiencies Provides ~$300 million in Value Creating Synergies 32% Sourcing Metal, Other Direct Materials and Indirect 14
Slide 15: Estimated timeline post-closing
Confidential *Estimated timeline; actual schedule dependent on regulatory approvals and closing of transaction. Closing Execute on Synergies Deleverage Balance Sheet Share Repurchases Regulatory Approvals Maximize Existing Operations Generate EVA Generate Cash and Grow EPS 2015 2016 2017 2018 Pay Qu
Slide 16: Ball has Offered to Acquire 100% of Rexam
Confidential Total Enterprise Value • £5.4 billion ($8.4 billion) Form of Consideration • Value of 610p per share* composed of 407p in cash and 0.04568 in new Ball shares Synergies • ~$300 million annual synergies by 2018 Financing • Fully committed debt financing Financial Impact • EPS, cash flow a
Slide 17: Valuation and deal metrics
Confidential 17 VALUATION 12/31/2014* EV/Revenue 1.39x EV/Adjusted EBITDA** 7.1x Premium to Current Share Price*** 36.3% DEAL METRICS (in $ millions) 12/31/2014* Equity Value $6,617 Enterprise Value (EV)**** $8,364 Revenue $6,026 EBITDA $880 Adjusted EBITDA** $1,180 NOTE: Rexam financials converted
Slide 18: Acquisition financing and deleveraging
Confidential • Acquisition financing consists of a £3.3 billion unsecured bridge loan agreement, a $3 billion multicurrency revolving credit facility and $2.2 billion of new equity* • Pro forma for the acquisition 2015E Net Debt / EBITDA** would be approximately 4.5x • Committed to rapid deleveragin
Slide 19: Over $4.5 Billion of Free Cash Flow Generation Since 2004
Confidential 2008 $321MM 2007 $440MM 2006 $183MM 2005 $267MM 2004 $340MM 2011 $505MM 2010 $506MM 2009 $373MM 2012 $548MM 2013 $461MM 2014 $622MM *Free Cash Flow defined as cash flow from operations minus capital expenditures. Over $4.5 Billion of Free Cash Flow* Generation Since 2004 19
Slide 20: Free cash flow, share repurchases and leverage history
Confidential 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 $0 $100 $200 $300 $400 $500 $600 $700 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2002 Schmalbach Acquisition 1998 Reynolds Acquisition 2006 US Can Acquisition 2009 AB InBev Acquisition (Bar Equals Total Free Cash
Slide 21: Comparable Diluted EPS
Confidential $2.33 $2.73 $3.01 $3.28 $3.88 2010 2011 2012 2013 2014 Comparable Diluted EPS Adhering to Our Value Creation Model and Executing Our Drive for 10 Vision Generates 10-15% EPS Growth Over the Long-Term The Acquisition of Rexam is Additive to Our Long-Term EPS Goal 21 2010 and 2012 compara
Slide 22: Transaction summary and rationale
Confidential • Aligns with Ball’s Drive for 10 Vision • Fuels long-standing financial strategy of growing EPS, cash flow and EVA$ • Offers significant, achievable synergies and efficiencies • Leverages complementary product lines and company cultures • Addresses evolving packaging industry dynamics
Slide 23: Confidential 23
Confidential 23
Slide 24: Appendix: Non-GAAP Financial Measures Reconciliation
Appendix: Non-GAAP Financial Measures Reconciliation a
Slide 25: Free Cash Flow reconciliation
Confidential ($ in millions) 2002 2003 2004 2005 2006 2007 2008 2009 Cash flow from operating activities $452 $364 $536 $559 $401 $673 $628 $560 Capital spending (158) (137) (196) (292) (280) (309) (307) (187) Proceeds for replacement of fire-damaged assets 61 49 Incremental pension funding, net of
Slide 26: Understanding the Transaction
Beer and CSD Customers Self- Supply and Sponsor Entry Merger Reduces Freight Costs to Serve Customers Locally These and Other Synergies Result in Lower Prices to Customers Understanding the Transaction
Slide 27: Local competition and shipping costs
Local Competition Shipping Costs are Very Significant Complementary Footprints Limited Overlaps and Lowered Freight Costs Powerful Customers History of Self- Supply and Sponsored Entry Multiple Substrates Plastic (PET) and Glass Substantial Efficiencies Marginal Cost Reductions Transaction will Lowe
Slide 28: Complementary Global Footprints
Complementary Global Footprints Ball Only Rexam Only Can Plant Locations Ball but not Rexam is in China, US Northeast, Florida, Benelux, and Serbia. Rexam but not Ball is in India, US Pacific Northwest, Russia, and Scandinavia.
Slide 29: Shipping Empty Cans is Inefficient and Expensive
Shipping Empty Cans is Inefficient and Expensive Complementary Footprints of Ball and Rexam Plants Reduced Shipping Distances Lower Prices for Customers Serving Customers Better Locally Material Costs 68% Conversion Costs 26% Freight Cost 6% Cost Breakdown of Aluminum Can Freight Substantially Highe
Slide 30: Serving Customers Better
Serving Customers Better if we don’t, they may increase internal production • Customers already produce 20 billion cans annually in North America • AB InBev in US supplies 45% of its own needs through wholly-owned MCC • Integrated customers own large, industry-leading plants • Customers can maximize
Slide 31: Entry is Occurring
Entry is Occurring Customers Support Entry with Long Term Contracts Sponsored Entry of Can-Pack S.A. in UK by Major Customers Under Construction: Helvetia Packaging plant, Saarlouis, Germany Caribbean Can Manufacturing Company Opens in Puerto Rico: Coke bottler is JV partner Numerous Entrants in Chi
Slide 32: Additional Information and Where to Find It
Additional Information and Where to Find It This presentation may be deemed to be solicitation material in respect of the proposed acquisition of Rexam PLC (“Rexam”) by Ball Corporation (“Ball”), including the issuance of shares of Ball common stock in respect of the proposed acquisition. In connect
Slide 33: Forward-Looking Information
Forward-Looking Information This presentation contains “forward-looking” statements concerning future events and financial performance. Words such as “expects,” “anticipates,” “estimates” and similar expressions identify forward-looking statements. Such statements are subject to risks and uncertaint