Ball Corp. to sell aerospace business unit

Westminster, Colorado-based Ball Corp. has agreed to sell its aerospace business unit to United Kingdom-based BAE Systems. Ball says the divestiture decision “creates a focused, high-margin global aluminum packaging leader.”

The agreement calls for Ball to sell its aerospace business to BAE Systems for gross proceeds of $5.6 billion in cash, which represents 19.6 times Ball Aerospace’s last 12 months comparable earnings before interest, taxes, depreciation and amortization (EBITDA), as of June 30.

The transaction, pending regulatory approvals and closing conditions and adjustments, is projected to close in the first half of 2024, the company says.

Ball says following the anticipated close of the transaction, it will use 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 to reduce net debt to pro forma expected 2023 comparable EBITDA to approximately 3.0 times, the low-end of the company’s long-term leverage range.

As a result, Ball says it “will be well-positioned to accelerate capital return to shareholders via share repurchases and dividends over a lower average invested capital base.”

“BAE Systems is well positioned to invest in Ball Aerospace to elevate the combined business to new heights, generate significant value to critical mission partners, offer customers more affordable solutions and enable a safer world for all stakeholders benefitting from today’s agreement," Ball CEO Daniel W. Fisher says.

“Ball Corporation’s improved balance sheet strength and flexibility, highly cash generative packaging businesses and our team’s cost-efficient ownership mindset provide an excellent equation for increasing the return of value to shareholders, maximizing value from our existing operations and investing in our future growth through the lens of economic value added.”

Fisher also points to recycling as a part of the company’s future. “Executing our strategy of enabling the greater use of circular aluminum packaging on a global scale continues," he says. "Our acceleration of low-carbon, best-value aluminum packaging initiatives in the years to come will stimulate organic growth across our global packaging operations and improve the world for future generations. Our innovative portfolio of aluminum cans, bottles and cups for single-serve, refill, reuse and recloseable applications has untapped potential, and we look forward to unlocking that value and delivering sustainable compounding shareholder growth now and beyond.”