Ball Corp.'s acquisition of Alcan Packaging assets will launch the company into barrier polypropylene bottles.
Ball's bottle focus up to now has centered on commodity PET types, for beverage packaging, said Ball spokesman Scott McCarty.
Alcan said last summer it was looking to sell its food-packaging bottles business, which includes multilayer and transparent containers mainly developed when the business was part of Pechiney Group, before Alcan bought the French firm in 2003.
``With this sale, Alcan Packaging takes another significant step in our continued strategy of focusing resources on markets where we enjoy scale and leadership positions,'' Alcan Packaging President and Chief Executive Officer Christel Bories said in a Feb. 27 news release.
Ball agreed to pay $180 million in cash for Alcan plants in Batavia, Ill.; Bellevue, Ohio; and Brampton, Ontario. Certain assets in Alcan facilities in Newark, Calif., and Neenah, Wis., also are included. Alcan last year estimated the business had sales of $130 million in 2004, including a small operation in France.
The containers are used to package juice, energy drinks, food-service items, coffee, ketchup, sauces and other foods and beverages. The to-be-acquired assets also make barrier PET bottles for similar applications.
Ball's North American blow molding sales were about $487.5 million for 2005, according to the firm's annual report.
The three plants Ball intends to buy employ about 470. Broomfield, Colo.-based Ball expects to complete the purchase by the end of March.
``This acquisition enables Ball to supply a broad range of blue-chip customers, some of whom are new to us and some of whom know Ball through our metal food-container operations,'' said Ball Chairman, President and Chief Executive Officer R. David Hoover in a news release.
Hoover said the Alcan plants complement Ball's bottle plants, which are in Chino, Calif.; Ames, Iowa; Baldwinsville, N.Y.; Watertown, Wis.; and Delran, N.J. Ames is Ball's largest site and is expanding.
``We are confident that the bottle business assets to be sold will benefit from new opportunities and realize their full growth potential with Ball, a company recognized for its commitment to the segment,'' said Alcan Packaging Food Americas President Ilene Gordon in a news release.
``Alcan is getting out of food-related bottles in North America and will concentrate on our pharmaceutical bottles and flexible packaging,'' Alcan spokeswoman Polly Moles said from her firm's Chicago office. The Montreal company's flexible packaging entrants include pouches in which aluminum is sandwiched between two plastic layers.
Alcan makes pharmaceutical bottles in Des Plaines, Ill., and Youngsville, N.C. Late last year it announced the closure of its Centralia, Ill., plant, which blow molded pharmaceutical and health-care bottles.
For now, Ball will operate acquired equipment and assets from Newark and Neenah at those sites, but the plants house other activities Alcan is retaining: Newark has a large flexible packaging business, while Neenah is a technical center. It was not clear immediately what Alcan wants to do with a food-bottle unit in Uchaux, France. According to one analyst, Ball has been losing customers to Alcan.
``[Ball will] be able to offer this to their food clients. It's a great set of assets to run Gatorade for Pepsi,'' Tim Burns, principal of Cranial Capital of Solon, Ohio, said Feb. 27 at Packaging Strategies in Ponte Vedra Beach, Fla.
Ball products were mostly for commodity, water and soft drinks, he added. ``With the Gatorade contract and the acquisition, they're going to approach 50 percent custom.''
Also at Packaging Strategies, an Alcan official said his firm's food-related PET assets will be better suited under Ball, which is more focused on that segment.
``We'll continue to focus on flexibles,'' said Glenn Fish, vice president for strategy and business development for Alcan Food Packaging Americas.
Ghansham Panjabi, an equity analyst with Wachovia Securities in New York, wrote in a Feb. 27 research report that synergies will come from Ball being able to offer a broader product base to its food customers in metal and plastics.
The Alcan agreement is the second deal Ball has announced this fiscal quarter. In mid-February it said it would buy assets from U.S. Can Corp., including plants that injection mold pails and drums in Alliance, Ohio, and Newnan, Ga., and a much bigger aerosol can business.
Standard & Poor's Rating Services said Ball's ratings and outlook remained unchanged after the announcements that it would buy Alcan and U.S. Can assets. S&P also maintained Alcan's ratings as stable.
Plastics News reporter Angie DeRosa contributed to this story.
* * *
HQ: Broomfield, Colo.
2005 sales: $5.75 billion
Profit: $261.5 million
* Acquired Alcan bottle plants:
Sale price: $180 million
2004 sales for acquired plants: $130 million
Products: barrier PP and PET bottles
Markets: Juice, energy drinks, coffee, ketchup & other food & beverage, & food-service items
* Existing Ball bottle plants in North America*:
2005 sales for existing plants: $487.5 million
Profit: $17.4 million
Products: mainly PET commodity bottles
Markets: Water & soft drinks, including for Pepsi-Cola & Gatorade bottlers, beer, single-serve juice & wine, & hot-fill drinks
*Ball's plastic bottle operations include plants in Tianjin, Taiwan, and Taicang, China