In a significant business development, Ball Corporation (NYSE: BALL), globally renowned for its aluminum packaging, has inked an agreement to offload its aerospace division to BAE Systems (LSE: BA.) for a whopping $5.6 billion. This deal translates to an impressive 19.6x Ball Aerospace’s LTM comparable EBITDA as recorded on June 30, 2023. The anticipated closure for this transaction is in the first half of 2024, pending standard regulatory approvals and closing conditions.

Upon the successful culmination of this deal, Ball Corporation intends to utilize roughly half of the after-tax proceeds, approximated at $4.5 billion, coupled with the strong free cash flow from its packaging wing, to cut down its net debt. The goal is to achieve a net debt to pro forma expected 2023 comparable EBITDA ratio of about 3.0x. Consequently, the company is set to bolster its capital return to shareholders via dividends and share buybacks, positioning itself on a stronger financial pedestal.

Daniel W. Fisher, Ball Corporation’s chairman and chief executive officer, hailed Ball Aerospace’s rich legacy since 1956, emphasizing its pivotal role in offering scalable tech solutions. He expressed optimism about the synergy between Ball Aerospace and BAE Systems, foreseeing enhanced capabilities in national defense, intelligence, and space-based assets. With locations spread across Boulder, Broomfield, and Westminster, Colorado, Ball Aerospace is primed to be an invaluable asset to BAE Systems. Fisher conveyed gratitude to the Ball Aerospace team, envisaging a brighter future with BAE Systems at the helm.

Moving forward, Ball Corporation plans to leverage its share repurchase programs and quarterly dividends to enrich shareholder value. Fisher highlighted Ball Corporation’s aspirations to promote the broader application of circular aluminum packaging, aiming for organic growth across its global packaging endeavors. He underscored the company’s commitment to sustainable, eco-friendly packaging initiatives, which resonate with the needs of contemporary consumers.

For this monumental transaction, Ball Corporation has roped in Morgan Stanley & Co. LLC as its financial consultant and Skadden, Arps, Slate, Meagher and Flom LLP alongside Axinn Veltrop and Harkrider LLP as legal and regulatory advisors.

  BAE Systems, Ball Aerospace, Ball Corporation, Colorado, Daniel W. Fisher, Westminster