Firm offer announced The bid for Rexam has been anounced at an equivalent price of 610p . At current Rexam share price 570p we are better SELLERs
The issues with this firm bid is that it is very long dated. It may close by June 2016 just the time value of money using wacc 8pct and 450days to settle mean that 610p equivalent on offer becomes 560p
The bid requires approval from BALL shareholders and the transaction is going to leverage their BS aggresively. If credit markets look less liquid in 6 months time (when bidder may call the meeting) then Ball shareholders may reject the transaction
Antitrust is an issue and supposedly there would be several buyers for the potential divestments. But TNT/UPS showed many buyers for divestments does not mean real buyers.
Finally, there will be no scheme circular/offer docs until antitrust clearance is granted (PRE condition)
Conf call at 1pm . We wil comeback with a PDF report after that
Details: Type: UK Scheme of arrangement but requires afirmative vote by the bidder's share holders. Terms: Rexam shareholders will receive 407p in cash and 0.04568 new Ball shares. (The transaction values Rexam at 610p per share which is the same as per original approach) In addition, Rexam Ordinary Shareholders will be entitled to the 2014 Final Dividend of 11.9 pence announced by Rexam today, and to any other dividends declared or paid by Rexam in respect of any completed six-month period ended 30 June or 31 December between the date of this announcement and the date of the day before the Effective Date consistent with Rexam's past practice, provided that such dividends do not exceed the corresponding interim or final dividend paid or declared in respect of 2014. Closing: The Offer is expected to complete in the first half of 2016.
Key Conditions
1. The transaction is subject to approvals from each company's shareholders Ball has committed to hold the Ball Shareholders' meeting to approve the issuance within six months of the date of this announcement. 2. EU and US Regulatory approvals is a PRE condition. It is expected that the Scheme Document will be posted to Rexam Shareholders shortly after the satisfaction or waiver of the Pre-Condition.
It is expected that the necessary clearances will be obtained in the first half of 2016. Following closing of the transaction, Ball will remain a New York Stock Exchange listed company domiciled in the U.S. -we expect the combination will provide $300 million of annual run-rate, value creating synergies.Given the cash generative capabilities and the $300 million of annual run-rate synergies of today's proposed transaction, we expect to maintain a solid credit profile after this transaction is complete. Our pro forma leverage will be approximately 4.5 times net debt to EBITDA following this transaction, a level similar to our leverage following the Reynolds Metals transaction, when we were a much smaller company. Once we have reduced the leverage to levels in the range of 3.0 times net debt to EBITDA, the company will re-initiate its share repurchase program, and we are targeting 2018 for that Ball Corporation (NYSE: BLL) will host a conference call on Thursday, February 19, 2015, to discuss the proposed transaction. The call will begin at 6 a.m. Mountain Time (1 p.m. U.K. Time). The North American toll-free number for the call is 800-920-2905, the U.K. toll-free number is 0800 528 0280 and other international callers should dial 212-271-4651. Rexam will hold a presentation for analysts and investors to discuss its results for the full year 2014 at 9:00 a.m. UK time at the Merrill Lynch Financial Centre, 2 King Edward Street, London, EC1A 1HQ. Subject to certain restrictions, the presentation will be webcast live on www.rexam.com<http://www.rexam.com> at the above time and subsequently will be available on demand. The 09:00 UK conference can also be accessed via audio link by dialling: UK: + 44 (0)20 3139 4830 US: +1 718 873 9077 Access code: 17347007#
Alex Olvera Makor Capital 34 Dover Street London W1S 4NG United Kingdom
Direct line: + 44(0) 207 993 0793 e-mail: aolvera@makorsecurities.com<mailto:aolvera@makorsecurities.com>
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