Working with a 610p takeover price for Rexam PLC (LSE-REX) (0.081 BLL & 210p per share), 1.5% of Revs synergies ($215M), $100M deal expenses (paid using cash), 5.5% deal debt interest rate, 35% tax rate; this is before any required divestitures, which look likely given high market shares and concentrated markets in N.A., Europe and Brazil. Pre-deal, REX LN (441p 20 day average closing price ending 2/4/15) trading multiples were 1.1x EV/Revs, 8.0x EV/EBITDA (13.6% margin) and 13.0x P/E (34p); Ball Corp. (NYSE-BLL) ($65/share 20 day price) trading multiples were 1.45x EV/Revs, 9.9x EV/EBITDA (14.6% margin) and 16.9x P/E ($3.84 EPS); and other major competitor Crown Holdings Inc. (NYSE-CCK) ($46.40/share 20 day price) trading multiples are 1.2x EV/Revs, 8.2x EV/EBITDA (13.9% margin) and 13.0x P/E ($3.56 EPS).
REX LN at 610p would be a 38% price premium to the prior 20 day average price; takeover multiples are 10.2x EV/EBITDA and 17.9x P/E. BLL at current $76/share price is trading at a 17% price premium to its prior 20 day price; the trading multiples are 11.2x EV/EBITDA and 19.8x P/E. The BLL multiples combined with REX LN (no synergies) are 10.9x EV/EBITDA ($2.03B, 14.1% margin) and 19.4x P/E ($3.92 EPS, 2% accretive). Using the $215M synergy estimate, the BLL trading multiples are 9.9x EV/EBITDA ($2.25B, 15.6% margin) and 16.4x P/E ($4.64 EPS, 21% accretion).
At 538p, REX LN is trading at a 12% discount to the potential 610p deal price; the stock is up 22% from the prior 20 day average price. Since 2/5/15, BLL is up 6% and CCK is up 7%. The REX LN price reflects a predeal discount and antitrust concerns (if a transaction is announced).
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