Ball Corp. is set to acquire the U.S. and Argentine operations of Lombard, Ill.-based U.S. Can Corp., a move that will take U.S. Can out of plastics processing to focus on its European metals business.
Meanwhile, Ball could position any of the acquired plastics assets for sale, according to one equity analyst.
``I think it's a high probability,'' said Ghansham Panjabi with Wachovia Securities in New York.
With U.S. Can's injection molding operations, it's less likely that Ball will be able to achieve the same synergies it values in its PET bottles and metals operations, where it has scale and operates big lines at very high speeds.
``With plastic containers, it really doesn't make sense in terms of strategy,'' Panjabi said in a Feb. 15 telephone interview.
Broomfield, Colo.-based Ball announced the acquisition after the market closed Feb. 14. The deal is set to close by the end of March. Ball agreed to acquire the operations for 1.1 million shares of Ball common stock and repayment of $550 million of U.S. Can's debt. U.S. Can will maintain its operations in Europe.
U.S. Can is the largest maker of aerosol cans in the United States. Its U.S. and Argentine operations employ 2,300 and have sales of about $600 million. Its only plastics-related plants are injection molding facilities in Alliance, Ohio, and Newnan, Ga., where the company makes high density polyethylene open-head pails, screw-top pails and screw-top drums of 1-6 gallons.
``Our metal business and plastic business are ... intertwined enough that it made sense to not sell bits and pieces,'' U.S. Can spokesman Jim Peterson said in a Feb. 15 telephone interview.
Ball officials addressed the divestiture question about the plastics assets during a Feb. 15 conference call. Officials said that at this point, they intend to run them as part of the new business. The U.S. Can operation is one officials have been eyeballing.
According to a 2005 Plastics News' ranking, U.S. Can had estimated injection molding sales of $55 million and employed 250. Ball Corp. has five blow molding plants in the United States and reported $401 million in blow molding sales for 2004.