Ball announces agreement to sell aerospace business: creating 'a focused, high-margin global aluminum packaging leader'

The sale of the aerospace business, for $5.6bn in cash, is expected to close in the first half of 2024. The aerospace business - which represents around 14% of Ball's business - is centered in Boulder, Broomfield and Westminster, Colorado and is described as a ‘multi-dimensional platform for vital national defense, intelligence, and science hardware, software, and space-based assets’.

The acquisition will allow Ball – which in 2022 reported net sales of $15.35bn with 21,000 people employed worldwide - to reduce debt, return money to shareholders and build up growth in the packaging industry. 

"Ball going forward will be a pure-play aluminum packaging leader diversified across the beverage, personal care and household products industries for both single-use and reuse occasions," summarized Daniel William Fisher, chairman and CEO of Ball, as the company announced the sale.

Aluminum cans, bottles and cups

Ball is best known for its packaging business, and has been building on this over the years: becoming the largest producer of aluminum beverage cans after its 2016 acquisition of Rexam for around $6.1bn.

Other acquisitions include Aerocan SAS in 2011, Neuman Aluminum in 2019, the purchase of four metal beverage can plants from AB InBev in 2009, and US Can in 2006.

It now has 67 facilities across the globe for single-use, limited reuse and refill aluminum packaging: with 2022 net sales of $13.4bn when the aerospace business is excluded. 

The company's strategy, said Fisher, is to 'enable the greater use of circular aluminum packaging on a global scale'. 

"Our acceleration of low-carbon, best-value aluminum packaging initiatives in the years to come will stimulate organic growth across our global packaging operations and improve the world for future generations.

"Our innovative portfolio of aluminum cans, bottles and cups for single-serve, refill, reuse and recloseable applications has untapped potential, and we look forward to unlocking that value and delivering sustainable compounding shareholder growth now and beyond."

So what could that 'untapped potential' look like? The company already serves a diversified global customer base across multiple brand categories, channels, venues and occasions. But Fisher told investors in a conference call last week that the divestiture of the aerospace business will allow the company to find exactly where those growth opportunities are.

"Right now, we're constructed as a beverage business and a cups business and aerosol business, as you understand. But when we're talking to - for instance, mountain towns in Colorado, that are trying to remove plastic waste - they want to know everything that Ball has to offer to solve everything from single-use plastic cups to single-use plastic bottles to very difficult recycling infrastructures.

"And we need to organize our way to accelerate the growth that's right in front of us."

One of the focuses, says Fisher, will be the EMEA and North America regions, where "packaging legislation and customer substrate shift is aligning in aluminum packaging's favor" (North and Central American beverage packaging already accounts for around 44% of Ball's sales; with EMEA beverage packaging accounting for 24%) 

Championing the sustainable credentials of aluminum, Fisher says the company's job now - particularly when looking at these potential new opportunities - is to create clear communication around both the sustainability and economics of the format.

"We need a better carbon footprint story: without repute we believe we have the best, but [we need to] lean into that, and making sure that the cost profile and the economics of aluminum are in a position where it's a lot easier for our customers to move there. And I think we'll be able to do both of those post-transaction focusing on this business with all of our intent and all of our deliberateness and a flexible balance sheet, and an aligned business.

"We're moving in the right direction and aluminum has a lot of tailwinds that we're just going to be able to accelerate."