EU approves Ball and Rexam deal subject to 12 plant divestment

Ball must divest eight of its existing European metal beverage can manufacturing plants and two end plants, along with two of Rexam's metal beverage can manufacturing plants.

The business to be divested will have a manufacturing capacity in the EEA of more than 18 billion cans.

The beverage can maker must also divest what it called ‘European innovation and support functions’ in Bonn, Germany, Chester, UK and Zurich, Switzerland.

Ball Corporation said it was to acquire Rexam for $6.6bn (£4.3bn) in February 2015​.

Divested sites​

Can body plants to be divested are: Ball’s plants in the UK (Rugby and Wrexham), Germany (Weissenthurm, Hassloch and Hermsdorf), the Netherlands (Oss) and Poland (Radomsko), one of Ball’s two plants in France (La Ciotat), Rexam’s plant in Austria (Enzesfeld) and one of Rexam’s two plants in Spain (Valdemarillo).

Ball is also divesting two can end plants, one in Deeside (UK) and another in Braunschweig (Germany).

The firm announced conditional regulatory approval in Brazil late last year​, as part of this clearance, the company agreed to divest its plants in Alagoinhas and Jacareí.

The combined company will operate Ball's beverage can and end manufacturing plant in Três Rios and end plant in Simões Filho, as well as Rexam's 12 existing metal beverage manufacturing plants in South America.

Rexam and Ball supply beverage cans and aluminium bottles, to soft drinks, beer and energy drinks manufacturers.

Beverage cans are manufactured out of two separate metal parts, a can body and a lid (the can end), and are used for liquids such as carbonated soft drinks, alcoholic beverages, fruit juice and energy drinks.

Margrethe Vestager, commissioner in charge of competition policy, said soft drinks or beer in cans are widely consumed by European citizens.

“The substantial remedies offered will ensure that effective competition is maintained in the already concentrated drink can industry so consumers do not end up paying higher prices for their favourite refreshments."​

Deal would have risked increasing prices - EU​

The Commission investigation showed the transaction would have reduced competition in the already concentrated markets for beverage cans and risked increasing prices for customers.

Approval is conditional upon Ball divesting ten plants making can bodies and two plants making can ends to a suitable purchaser to address these concerns.

Can-Pack and Crown, the only remaining main players in Europe, would not have posed a sufficient competitive constraint after the transaction, said the Commission.

The industry is characterised by high barriers to entry as manufacturers need to have a certain scale and geographic spread to compete effectively for the largest volumes and provide the wide variety of can sizes and shapes required by customers in the EEA, it added.

The combined company will operate Rexam's 13 European beverage can manufacturing plants and two end plants, as well as three Rexam can plants and one end plant in Russia, and Ball's Bierne, France, Belgrade, Serbia, and Lublin, Poland, manufacturing plants.

Ball plans to move its European regional support office to Rexam's in Luton, UK and will retain Rexam's Tongwell, UK, research and development center.

Rexam and Ball are, respectively, the first and second largest beverage can manufacturers in the European Economic Area (EEA) and the two market leaders worldwide.

Ball expects to get the remaining regulatory clearances to close the proposed acquisition during the first half of 2016.