Updated: Is Anheuser-Busch InBev selling U.S. can plants?
We are picking up lots of rumors that Anheuser-Busch InBev has found a buyer for its can and lid plants in the U.S. Names being tossed around as buyers include Ball Corp. and Silgan Containers, two big suppliers of packaging. We are told that a deal could be announced in the next few days. Anheuser-Busch, Silgan and Ball declined to comment on Monday.
Lager Heads previously reported that executives from other packaging companies were visiting and inspecting Metal Container Corp., the Anheuser-Busch division that manufactures beverage cans and lids. (MCC is a big player. In 2007, it controlled about 25 percent of the aluminum beverage can market in the U.S.)
We stress that we have not confirmed an impending sale, but the sudden increase in tips and heads-ups makes us suspect that something is up. It was widely suspected that Anheuser-Busch InBev would have to sell its packaging division, or parts of it, to pay off debt from the combination of Anheuser-Busch and InBev. Analyst Gerard Rijk of ING estimates that Anheuser-Busch InBev still has $4.5 billion of asset sales left to do.
Anheuser-Busch’s Metal Container Corp. “harbors gold-plated assets that, in the hands of efficient operators, could offer significant synergies and upside over the ensuing 12-24 months,” KeyBanc Capital Markets analyst Chris Manuel wrote on June 11. Manuel estimated that a sale of Metal Container could fetch a price between $1billion and $1.4 billion.
Who has the firepower to pull off a deal for part or all of Metal Container? The amount of debt carried by potential acquirers can be an important factor. Analyst Parrish Glover of Morningstar provides some numbers. Rexam has one of the tidiest balance sheets among big packaging companies, with a net debt-to-capital ratio of 55 percent. By comparision, Ball’s ratio is 65 percent and Crown Holdings‘ is 85 percent. The ratio measures a company’s indebtedness — the higher the number, the more assets are tied up in debt.
Where this leaves us, we’re not sure. But we will continue chasing the story.
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Jeremiah McWilliams is a native Virginian who came to the Post-Dispatch in early 2007 to cover beer and other consumer products. He previously covered manufacturing for the Virginian-Pilot newspaper in Norfolk, Va. He is a graduate of Washington and Lee University. 
I work for MCC,I can’t believe that Inbev would destroy our company.I hope Siligan buys us.I think it would be our best bet..
Wayne……Believe it, It’s all about money or greed whatever you want to call it.You are right Silgan is our only hope ,they might keep us intact.Don’t know how true it is but I heard a rumor that brito wanted a 10 year price fix on the cans he buys from who ever buys MCC.Talk about balls or stupidity which ever.
The idea that AB obtains cans from ABPG/MCC at cost is a misconception, ABPG was formed as a separate company that treated AB as a customer. When I worked there Pepsi was ABPG’s biggest customer and AB only had about 45% of their production in ABPG, the rest was made by other companies like Ball and Rexam and others.
When InBev sells the purchasing company will want some sort of guarantee that the AB business won’t be taken away right away, leaving the purchaser with can plants and no business. Such a request is fairly standard in purchases of this nature.
Some of the plants were having issues a few years ago, (i.e. Jacksonville and Columbus for example) so not sure how appealing those may be to potential buyers.
I believe Ball’s interest in MCC would be the same as Rexam’s or Crown’s, they don’t believe they can afford to let the competition obtain such a large portion of the industry…
BallITGuy,
you nailed it, infact Columbus brewery right now are using a bunch of cans from Ball because it is cheaper for them because MCC columbus is making more money making cans for pepsi
If they sell MCC which was the plan, they can pay off lot of debt. They will have to buy cans from the new owner but will pretty much dictate price.
MCC is not part of the core business of brewing beer. Sure they need the cans but want to get out of the can making business. Since MCC was a separate cmpany, I believe the brewery actually paid for the cans with some sort of play money.
Well the Ball aspect is official now:
Ball will acquire four of AB InBev’s plants in the U.S. for $577 million. The facilities being acquired are beverage can manufacturing plants in Rome, Ga.; Columbus, Ohio; and Ft. Atkinson, Wis., and a beverage can end manufacturing plant in Gainesville, Fla.
I can confirm what BallITGuy states about the sale. I was just informed. Now phase 2 of the dismantling of MCC starts. Who will be the next buyer??? Silgan…Crown??? There are a couple of plants on the west coast that would offer a strtegic geographical location for any buyer since there is only one Lid plant in California. With transportation costs on the rise again, any company who plans on supplying either of the 2 AB breweries or the several pepsi filling locations, must have a manufacturing facility in Southern California if they want to make a profit. Several years ago during the conversion from LOE to OLOF lids AB Van Nuys was on LOE while the California Lid Plant had converted to OLOF. Because of this Van Nuys had to get it’s lids shipped in from the MCC OKC Oklahoma Lid Plant. The cost to do this was reported to be 1 million dollars per month!
So let me open the bidding here. Can I get 250 million????? Come on Silgan!
SoCal,
Saw this in the other story that answers some of your questions:
Metal Container Corp.’s remaining holdings - seven metal beverage can and lid manufacturing plants - will be more focused on beer-can production. Anheuser-Busch InBev said there are no plans or activities underway to sell the remaining plants.
The sale of the plants represents another step in the brewers debt-repayment program, chief executive Carlos Brito said in a statement. The deal also allows Anheuser-Busch InBev to keep the facilities that are “most relevant” to its beer business, Brito said.