Ball Purchases Continental Can's European Operations Graphic
Jul. 30, 1990
INDIANAPOLIS (AP) _ Ball Corp. has acquired 33 metal packaging plants in Europe from Continental Can Co. Inc., giving the Muncie, Ind.-bhere's going to be a lot of opportunities in food containers there,'' Ringoen said in a telephone conversation from New York, where he and other company officials were meeting with analysts.
Ball also acquires plants in northern France, Belgium, the Netherlands and Great Britain through the acquisition. Before, Ball had only a small plastics operation in Northern Ireland and an electronics operation in West Germany.
In addition, the company expects growth from Coca-Cola Co., which receives 25 percent of its soft drink cans in Europe from Continental.
''It really gives us the opportunity to grow with Coke in Europe,'' Ringoen said.
He said Ball, a diversified company that also includes aerospace systems, had been looking to expand into the European container market for the past year. It had been part of joint ventures in the past but eventually would sell back its interest to the European partner.
''It has been on our agenda for a long time,'' he said.
Analysts said Ball has established itself firmly in Europe at a critical time and a good price.
Ball stock closed up 25 cents at $32.75 Monday on the New York Stock Exchange.
''It fills a void in Ball's global franchise approach and trying to serve their major customers,'' said Timothy P. Burns of the Cleveland investment house of Prescott Ball & Turben. ''They've had a very large interest in becoming a big player in Europe, which had been their only hole.''
Burns noted Ball had failed in previous ventures in Europe but now had ''the crown jewel of the Continental Can empire.''
''These things all have to happen at the right time, for the right price and the right merchandise,'' said H. Edward Schollmeyer of PaineWebber. ''I think they got a very good deal, and they have a lot of opportunities for future growth. Both Coke and Pepsi-Cola are aggressively pushing their products to Eastern Europe.''
Continental Can is a privately held business of Peter Kiewit Sons' Inc. of Omaha, Neb.
Under the agreement, Ball will pay Kiewit $200 million in common stock, $129 million of voting and $71 million of non-voting convertible, exchangeable preferred stock. The Kiewit stock will represent a 29 percent voting interest in Ball. Kiewit will be restricted from purchasing additional Ball shares.
Ball will pay $65 million in cash for Holland-American's half interest in the Ball-InCon Glass Packaging Corp., the joint venture the two companies established in 1987, which now has 13 plants across the United States.
Ball, which built its reputation on the glass home-canning jar business the Ball family started a century ago, had planned from the start to someday own the entire glass venture, Ringoen said.
Both Ball-InCon and the European operations will be operated as wholly owned subsidiaries of Ball Corp., with Ball In-Con retaining its own financing.
Continental Can Europe, which employs 10,000 people, had sales of $1.47 billion in 1989 and projects sales this year to grow to $1.66 billion. The company makes food, beverage and general metal containers, metal closures and plastic containers.
The deals should be completed before the end of the year, Ball said. It is subject to approval by Ball shareholders and U.S. and foreign government approval as well as Ball's obtaining financing.
Ball, which entered the metal beverage container industry in 1969, is now the nation's fifth largest producer of beer and soft drink cans. Last year 63.9 percent of its sales came from packaging products. Combined packaging sales of Ball, Continental Can Europe and Ball-InCon last year would have been $2.78 billion, officials said.
Ball, riding a resurgence in the metal can market, reported record second- quarter sales and earnings earlier this month. Revenues were $381.9 million, up 13.3 percent from the $337.2 million in sales in the second quarter of 1989. Income rose 25 percent to $18.8 million or 80 cents per share, from $15 million or 64 cents per share.